Cardano (ADA) Consolidates Below Resistance, Potential Rally to $2.47 If Historical Patterns Repeat

• Cardano [ADA] faces consolidation challenges, with resistance at $1.09, yet hints of an imminent rally are beginning to surface.

• Recent trading analysis indicates that ADA may target upwards of $2.47 if it successfully breaks through the current resistance level.

• “The increase in daily active addresses signifies growing confidence in the Cardano ecosystem,” stated an analyst from COINOTAG.

Cardano faces consolidation at $1.09, but rising active addresses and past price patterns suggest a potential rally towards $2.47.

Long-Term Trend Hints at Incoming Rally Potential for ADA

As ADA navigates its recent consolidation phase, the weekly chart provides clues that it may be set for a significant move towards $2.47 if previous patterns are to be repeated. This period of stagnation follows an ascending parallel channel formation completed late last year, characterized by resistance at $1.09 that has successfully staved off upward momentum.

Historically, ADA’s price action mirrors its performance during 2021, where after a sharp ascent, the price cooled off and entered a consolidation phase. Subsequent to this, ADA broke through its previous resistance, yielding an impressive gain of over 200% within just two weeks, reaching $2.47.

Source: TradingView

The relative strength index (RSI), currently at 62, indicates that while ADA has cooled from overbought conditions, selling pressure has yet to overwhelm buying sentiment. This balance reflects a prevailing belief among traders in the groundwork for a renewed rally.

Moreover, the Moving Average Convergence Divergence (MACD) indicator supports this bullish sentiment as it shows that despite the surge in sell volumes, the overall momentum of ADA remains on the rise.

Rising Network Activity Could Fuel ADA’s Rally

Observations of the Cardano network reveal a noticeable uptick in activity, diverging from previous quiet phases.

According to data from Santiment, the average number of daily active addresses on the Cardano network has surged to 50,828, indicating either a growing user base or a spike in trading activity.

Source: Santiment

However, despite the encouraging growth in active addresses, data sourced from DeFiLlama points to a decline in Cardano’s Total Value Locked (TVL), which has dipped to $518 million. A resurgence in decentralized finance (DeFi) activity is crucial for sustaining ADA’s bullish trajectory in the long run.

Market Sentiment Reflects Increased Short Positions

Recent data from Coinglass illustrates an increase in short positions among ADA traders, with the Long/Short Ratio falling to 0.824, the lowest observed in over a month.

Source: Coinglass

The growing prevalence of short positions may suggest bearish sentiment in the market, yet it could paradoxically facilitate a recovery should a short squeeze occur, pushing traders to close their positions with purchases.

Conclusion

In summary, while Cardano [ADA] currently wrestles with a consolidation phase around $1.09 and encounters a bearish sentiment reflected in short positions, the potential for a significant bullish rally towards $2.47 remains in play, underpinned by rising active addresses and historical price patterns. Traders should monitor market dynamics closely as developments unfold.