Cardano bulls would need to watch three important levels in order not to miss crucial market moves
Cardano’s price performance has been disappointing over the past few months. The asset is down more than 25% since November and has failed to gain enough momentum to return to pre-FTX catastrophe levels. However, the most recent recovery could be a sign of an upcoming reversal.
In the last 16 days, Cardano has gained approximately 5% to its value from the local low and reached the first short-term resistance level in the form of the 21-day moving average, which usually acts as the first barrier for an asset moving in a prolonged downtrend.
In case of a successful breakout, the ADA will start moving towards the next resistance level in the form of the 50-day moving average. In case of success, the probability of a trend reversal will be high.
The next key threshold to watch would be the $0.3 support level, which has been the foundation for every upward move for ADA in November. Even failure during such a breakout attempt would not make a recovery for ADA in the future impossible. Thanks to the resilient support level, Cardano might enter a prolonged consolidation, but not break down even further.
Additionally, investors should watch for a descending volume profile – a sign of fading trends. Decreasing volume usually reflects the inability or unwillingness of traders and investors to provide more selling pressure and push the asset’s price down.
According to profitability indicators, Cardano has been severely oversold for months. In order to keep up the pace, bears will have to find additional funding for their shorting operation, which might be a problem during the overall cryptocurrency market recovery.
