Disclaimer: The results of the following analysis are the sole opinion of the author and should not be taken as investment advice
- ADA formed a multi-month parallel channel pattern
- A bullish ADA could reach the midpoint of the channel at 0.3042
Cardano [ADA] has been under heavy selling pressure for the past few days, but the bulls are up to the challenge. At press time, there was a green flare indicating that the bulls have been buying ADA at discounted prices.
Read Cardanos [ADA] Price prediction for 2023-24
It was noteworthy that the slight upward momentum of ADA also corresponded with this Bitcoins [BTC] bounce after breaking the $16.73K level. A bullish BTC could also push ADA bulls to hit the midpoint of this channel.
A parallel channel lasting several months: is the trend continuing?
Source: ADAUSDT on TradingView
ADA price action has been forming a descending parallel channel pattern since August. At the time of writing, its price was near the lower border of the trading range but in a slight upward move.
Technical indicators suggested that conditions were ripe for continued bullish momentum and a convincing price reversal. For example, the Relative Strength Index (RSI) has been in oversold territory for the past four days, with a slight increase at press time. This indicated that a trend reversal could be imminent if accumulation continues, increasing buying pressure.
On-Balance Volume (OBV) was also up, suggesting increased trading volume that could increase buying pressure.
Therefore, ADA could push higher and target the channel midpoint at 0.3042. But first, the bulls need to clear the immediate hurdle around $0.2670. If they do, a smooth ride to the midpoint of the canal would be possible.
However, a break below the channel, particularly above $0.2309, would negate the above bias.
Finally, the increased development activity makes investors confident in Cardano
Source: Santiment
The recent surge in Development activities of ADA did not result in an immediate price change as investors viewed the asset negatively. However, according to Santiment, this has changed. Weighted sentiment retreated from lower negative territory, suggesting investors are relaxing their stance on the asset.
In addition, the number of active addresses (red bars) has increased enormously in the last 24 hours. This indicated that more accounts were trading ADA, which boosted trading volume (small white bars). Could these factors create a perfect condition for a price reversal and ADA uptrend?
However, a bearish BTC could invalidate the above forecast.
Source: Santiment
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