By Tobi Loba
The price of Cardano (ADA), the 8th largest cryptocurrency by market capitalization, is in the process of attaining a weekly close above a long-term resistance level at $0.166, a level it has not reached since May 2018.
A weekly close above this level would be significant. It serves as an indication that Cardano (ADA) is likely to test the $0.21-$0.26 price range.
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Cardano (ADA) Long-Term Resistance
Cardano (ADA) has been increasing since March when it attained a low of $0.017 following the outbreak of the Covid-19. The rally stalled once it reached the $0.166 resistance area in July. The area is also the 0.382 Fib retracement level of the most recent downward move.
After an initial rejection, ADA found support and initiated another attempt at breaking out above this level. While it has reached a high above it, it has failed to reach a weekly close higher than this resistance area since May 2018.
If successful in doing so, the next resistance areas would be found at $0.21 and $0.26, the respective 0.5 and 0.618 Fib retracement levels.
Technical indicators are leaning on being bullish. Despite a bearish divergence in the RSI, a drop has already occurred as a result, and the RSI is again moving above 70. A bullish cross in the Stochastic oscillator and a weekly close above $0.166 would likely confirm that the trend is bullish.
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Future Movement
The daily chart shows that ADA has finally been successful in moving above the $0.172 resistance area, something it had been struggling to do since Nov. 22.
The movement since the breakout resembles a re-test and validation of the area as support.
Technical indicators are bullish, suggesting that ADA is likely to continue moving higher.
The two-hour chart also shows that ADA is following an ascending support line and is expected to continue increasing as long as it is above this line.
Similar to the daily and weekly time-frames, technical indicators are bullish, supporting the possibility that ADA continues moving higher.
The two-hour chart also shows that ADA is following an ascending support line and is expected to continue increasing as long as it is above this line.
Similar to the daily and weekly time-frames, technical indicators are bullish, supporting the possibility that ADA continues moving higher.
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Cardano (ADA) Wave Count
Crypto trader @theEWguy outlined an ADA chart, which shows the price increasing at an accelerated rate towards $0.40 and potentially even $0.60.
The wave count shows that ADA is likely in what appears to be in an extended third cycle wave (shown in white below), while the wave count is given in black.
A likely target for the top of wave 3 is found at $0.29, which would give the 1:3 waves a 1:1.61 ratio — common in bullish impulses.
The most likely scenario is that ADA is in wave 1 of an extended cycle wave 3.
The sub-wave count for wave 1 is given in orange below and shows that ADA is in sub-wave 5.
A target for the top of the move is found at $0.22, after which a correction is expected.
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Conclusion
Although a short-term decrease could occur, Cardano (ADA) is expected to gradually move upwards towards the $0.21-$0.26 range.
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