Cardano (ADA) Technical Analysis: Spikes 13% Against BTC, Is This The Start of a Reversal?

ADA finally managed to break its bearish streak this week with the arrival of a major milestone announcement on December 18. The new Cardano 1.4 release has been hailed as the project’s biggest upgrade to date and includes optimized block storage from 1.3 million files down to 50,000 - making synchronising to the network and running a full node much faster, and more efficient - along with new support for the Linux operating system and a completely rewritten wallet backend for Daedalus.

This promising array of new upgrades has coincided well with the return of bullish traders to the crypto market and appears to have redirected some investors back towards the Cardano project. Right now, ADA has already broken through two main resistances at 1,020 and 1,085 Sats, with an impressive 13% gain against BTC. 24hr trading volume has also spiked considerably from $70 million earlier this morning to now over $90 million, as the bull run continues.

Will ADA be able to sustain its current momentum over the rest of Q4, or will bears take back control over the asset and send it crashing back down? Let’s take a look.

On the 1D ADA/BTC chart, we can see that the asset was finally able to break out of a 5-month falling wedge pattern after finding the bottom at 840 Sats and gathering enough momentum to exit out sideways. Low volatility kept the asset on a fairly flat trajectory until Bitcoin made a return to $3,600. At this point ADA was able to piggy-back on Bitcoin’s improving performance and ride the rising altcoin market to the first main resistance at 1,020 Sats. Today, however, we have seen the first signs of strong bullish momentum returning to this asset, which has now allowed ADA to pull away from the correcting Bitcoin market and continue its uptrend.

Looking at a number of 1D indicators, we get the impression that this could be the long-awaited reversal that the Cardano community has been waiting for - provided these conditions are met. 

-The price action needs to close above the 100 MA (currently <1% away from ADA’s value AToW)

--Once it closes above the 100 MA, candles will also need to break above the resisting Kumo cloud on the Ichimoku indicator.

ADA has already failed to close above the 1D resisting Kumo cloud on two separate occasions over the last three months - on October 10 and then again on November 6. If it can break through it on this third attempt, then this will be a very strong bullish reversal signal going into 2019.

Looking at other indicators over closer 4hr candles, we can see that momentum is still building behind the asset and could very likely carry ADA over this all-important threshold.

-We almost have a golden crossover between the 50 and the 200 EMA lines. This would be another very strong bullish momentum signal once these two lines converge.

-On the CMF, the indicator line has risen high above the zero line and is continuing to climb as buying pressure increases.

-On the RSI, the line has now broken well into the overbought region above off the back of increasing bullish momentum, now up at 80%.

-The 12MA on the MACD indicator is soaring above the 26MA below, with the biggest buying candles we’ve seen on the histogram since September 2018.

-Parabolic SAR indicator dots are now forming underneath the price action which is indicative of a favorably bullish trend.

Overall, we might expect a brief pull back as ADA corrects from being overbought, but ultimately, the trend appears to be firmly in the control of bullish traders. As long as momentum continues to hold at these current levels, we should expect ADA to break above the 100 MA before the weekend. However, Christmas weekend could prove tricky for the asset going into next week as traders typically take profits at this time of year. If the asset can find a strong support around the 1,080 Sats level, then it might stand a chance of holding on to today’s gains and waiting for new bullish support to arrive before continuing on.

Cardano Price Targets

All ROIs are calculated from the asset’s current value at 1,070 Sats.

PT1: 1,085 Sats (1.38%)
PT2: 1,130 Sats (5.61%)
PT3: 1,210 Sats (13.08%)