Cardano pares most of its losses from the first quarter of the year

The price of Cardano (ADA) rallied on March 25, putting it on track to recoup a large chunk of the losses it suffered in the first two months of this year.

Cardano: Still not so bullish?

ADA price rose about 7.5% in Friday trade to hit $1.19 on the month after bottoming at around $0.75. Cardano token’s huge bounce movement accounted for around 60% gains. But, it remains at risk of losing its bullish momentum in the coming weeks.

Central to this bearish analogy is a multi-month descending channel pattern with a reliable history of simultaneously triggering and limiting ADA bounce attempts since September 2021..

Cardano pares most of its losses from the first quarter of the year
Cardano pares most of its losses from the first quarter of the year

Above all, the upper trend line of the channel has proven to be an ideal selling zone, which is now being tested again as resistance.as shown in the graphic below.

ADA/USD daily chart. Source: TradingView

The ADA Daily Relative Strength Index, now at 71.80, is also warning of its “overbought” nature. In a perfect scenario, an RSI reading above 70 will lead to selling to offset the overvaluation of the underlying asset. This puts the Cardano token at risk of an imminent pullback towards the lower trendline of the descending channel.

More signs of a possible ADA pullback can be seen on the weekly charts. specific, The Cardano token bounce has seen it test its 20-week (near $1.21) and 50-week EMAs (near $1.31) as resistance. They were instrumental in capping ADA gains in January 2022.

Weekly chart of the ADA/USD pair. Source: TradingView

Alex Benfield, analyst at Weiss Ratings, called This ADA needs to reclaim $1.20 as support, a level that has kept its bullish bias intact several times in 2021. He noted that if the Cardano token succeeds, the likelihood of the Cardano token rallying in the medium term will be higher, adding:

“Until it overcomes that resistance, this move risks losing momentum.”

ADA is “fundamentally optimistic”

Alexander Mamasidikov, co-founder of cryptocurrency wallet service MinePlex, believes so Cardano’s preliminary outlook is bullish despite the overbought risks.

The executive believes ADA’s continued growth momentum is more fundamental than technical, as the token began to surge after becoming one of the assets included in Grayscale Investment’s new altcoin fund. called Smart Contract Platform ex Ethereum Fund (GSCPxE).

“The growth is a testament to how impressed investors are with the revolutionary role of the Cardano blockchain in the fast-growing Web3.0 smart contract development.”, Mamasidikov explained, although he agreed that levels near $1.50 could play against ADA’s bullish move. Excerpts:

“From the ADA growth path, the $1 price level remains the key support level while the currency’s resistance is locked in at $1.5 in the short to medium term.”

The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. All investing and trading involves risk, so you should do your own research when making a decision.

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