The cryptocurrency market has been abuzz with Cardano (ADA) showing impressive gains recently. Over the past week, Cardano’s price surged by 21%, with a 7% increase in just the last 24 hours. While this rally demonstrates strong upward momentum, indicators suggest the coin might be heading into a consolidation phase. Let’s explore what the charts and data reveal about ADA’s future trends.
Cardano’s Current Performance: Signs of a Healthy Rally
Cardano has been trading within a rising trend structure, with its exponential moving averages (EMAs) providing bullish signals. The 20-period EMA is nearing a crossover with the 50-period EMA, which typically points to a strengthening trend. This supports the argument that Cardano’s mid-term trajectory remains positive.
However, a closer look at momentum indicators paints a more cautious picture. The Relative Strength Index (RSI), a key metric for measuring momentum, reveals a hidden bearish divergence: while ADA’s price trended lower between December 9 and January 6, the RSI moved higher. This divergence often signals slowing momentum rather than a full-fledged trend reversal.
Short-Term Trends and What’s Next
Should Cardano fail to break above the $0.43 resistance level in its next price candle, a pullback risk might grow, though significant selling pressure is absent. On-chain data indicates that both short-term traders and long-term investors are holding their positions, suggesting patience within the market.
Spent Coin Age Bands, which track holder activity, show a sharp decline in ADA movement across all time horizons. For instance, ADA held by short-term investors (7–30 days) saw an 87% drop in movement, while coins held by long-term holders (2–3 years) fell by 93%. This trend underpins the possibility of a sideways trading range, rather than a sharp decline.
Key Support and Resistance Levels
For Cardano to maintain its bullish structure, it must hold above the $0.39 support level. Falling below this could lead the price to test the $0.33 range. Conversely, breaking and holding above the $0.43 resistance level would invalidate the bearish divergence and may launch Cardano into its next bullish phase. If this occurs, ADA could target $0.48 in the near term, with potential momentum toward $0.60.
How to Take Leverage of This Market Phase
Traders and investors should consider monitoring ADA’s support and resistance zones closely for breakouts. Additionally, for those looking to diversify their crypto investments, Ledger Nano X offers secure cold storage solutions for ADA and other cryptocurrencies. Protect your assets during times of market consolidation.
In summary, while the Cardano rally remains within a broader bullish trend, momentum indicators and holder data suggest a period of sideways trading between $0.39 and $0.43. This consolidation phase is likely to reset momentum and decide ADA’s next directional move.
