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Cardano (ADA) is up 25% over the past week, breaking through a key resistance level – the top line of a descending triangle pattern. This bullish breakout initially generated optimism, with the market eyeing a return to two-year highs of $1.32.
However, this increase has stalled. Over the past two days, buying pressure has decreased, causing ADA price to stabilize in a narrow range.
Cardano stalls as traders stay on the sidelines
Last week, Cardano’s rally pushed the price above the upper line of the descending triangle pattern in which it had been trading in previous weeks. TinTucBitcoin said this bullish breakout initially generated optimism as traders aimed to reclaim two-year highs of $1.32.
However, due to waning buying pressure, ADA price has stabilized in a narrow range over the past two days. It encountered resistance at $1.11 and found support at $1.05.
When the price of an asset trades in a tight range, it represents a period of indecision in the market, where buyers and sellers are roughly equal. Typically, price stability sets the stage for a significant price movement as traders wait for a breakout or breakdown to indicate the next trend. With technical indicators showing a sharp decline in buying activity, ADA price could lose some of its recent growth.
For example, the falling Aroon Up index supports this bearish outlook. As of the time of writing, the index is in a downtrend and has been since the price stabilization began.
The Aroon Index measures the strength and direction of a trend by analyzing the time since an asset’s recent high (Aroon Up) and low (Aroon Down). As Aroon Up declines, the asset’s recent highs become less frequent, suggesting that bullish momentum is weakening or may turn bearish.
Furthermore, ADA’s negative weighted sentiment reflects growing bearish pressure on the altcoin. Currently, this number stands at -0.71.
When an asset’s weighted sentiment is negative, this indicates that the overall market sentiment, as measured from social data, is pessimistic. This suggests that traders and investors are more negative than optimistic, which could impact the asset’s price performance.
ADA Price Prediction: Bullish breakout or further downside?
At the time of writing, ADA trades at $1.08. Increasing bearish pressure on the coin could drag the price towards the $1.05 support zone. If buyers fail to defend this level, the coin’s price could fall below $1 to trade at $0.94.
Conversely, if market sentiment turns positive, Cardano price could overcome the $1.11 resistance and reclaim two-year highs of $1.32.
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