Cardano price has skyrocketed nearly 10% in the past 24 hours, thanks to an increase in trading activity. This breakout was supported by surging demand for the altcoin, reflected in trading volumes exceeding $1 billion during that period.
Technical analysis shows that if buying pressure is maintained, Cardano price could return to a two-year high of $1.32. Here’s how this can happen.
Cardano Approaches Breakout From Bearish Pattern
TinTucBitcoin’s latest review of the ADA/USD one-day chart shows that Cardano has been trading within a descending triangle since December 3, when it reached a two-year high of $1.32. This bearish pattern forms when the asset price makes a series of lower highs while maintaining a horizontal support level. This signals an increase in selling pressure as traders sell off for profits.
However, the growth in ADA demand over the past 24 hours has pushed its price up to the upper line of the descending triangle, placing it in position to break to the upside. When an asset’s price is near the upper line of a descending triangle, this signals a possible retest of resistance in a bearish continuation pattern. A successful break above this line will signal a bullish reversal and confirm the strength of the uptrend.
According to indicators from ADA’s daily chart, this breakout could happen soon as buying pressure increases. For example, the currency’s Elder-Ray index returned to positive values for the first time since December 13, further confirming this optimistic view. At the time of writing, the index stood at 0.057.
An asset’s Elder-Ray Index measures the strength of bull and bear markets. As with ADA, a positive value indicates bullish pressure, suggesting that buyers are dominant and pushing prices up.
Furthermore, ADA’s MACD line (blue) is about to cross its signal line (orange) at the time of writing. This setup points to the possibility of a bullish crossover, signaling an increase in upward momentum in the asset price. This shows that buying pressure is increasing and is often interpreted as a sign of an upward price trend.
ADA Price Prediction: Will It Break Out Or Retreat?
ADA is trading at the upper line of the descending triangle at $0.92 at the time of writing. Increased buying activity hints at the possibility of a break above this key resistance level, which could push Cardano price towards two-year highs.
However, a failed attempt to overcome the $0.92 resistance could reconfirm the downtrend, erasing ADA’s recent gains. In such a scenario, the price could drop to the $0.84 support level, invalidating the bullish view.