The Cardano (ADA) price has been increasing at an accelerated rate over the past two weeks, moving above a nearly two-year-long resistance line.
A weekly close above this area would allow for a rapid increase, while a close below would indicate that the trend has ended.
The ADA price has been increasing since it reached a low on March 13. The increase has been quite rapid, moving almost parabolically. This is unsustainable in the long-run. Since September 2018, the main resistance area was found at $0.107, twice rejecting the price.
The price finally moved above the area this week, reaching a high of $0.14. However, it has decreased considerably since, currently trading at $0.114, only slightly above the previously mentioned area. The weekly close is extremely important.
A close below $0.107 would be a strong sign that the upward move has already ended and that ADA will begin a long corrective period. On the other hand, a close above would allow for the price to increase all the way to $0.17.
While the weekly RSI is at it’s highest level ever, it has not formed any type of bearish divergence, so there is no sign of reversal yet.
Cryptocurrency trader @CryptoNTez outlined an ADA chart explaining that a decline is on the cards before the possible continuation.
The daily chart shows that there is a very strong support area at $0.09, which will very likely initiate a bounce if the price drops to those levels.
Furthermore, a bullish cross has taken place between the 50 and 200-day moving averages (MA). The former also coincides with the $0.09 support area.
Therefore, the possibility of a continuation remains open if the price is trading above this area.
In addition, the price has been following an ascending support line since May 28. As long as the price is trading above this support, it should continue moving upwards.
The movement since the March bottom closely resembles a five-wave Elliott formation. The third wave caused a breakout from the parallel ascending channel. Meanwhile, the fourth one validated the middle of the channel as support.
So, the question is whether the fifth wave has ended or if it will extend further. Because it’s the same length as the third one, it’s more likely that it has ended. Therefore, it is possible that the price retraces towards the $0.09 area, finishing the A wave, before bouncing and eventually continuing its downward move.
Even if the fifth wave extends for slightly longer, it definitely seems that the upward trend is nearing its end.
Source: Be In Crypto