Cardano (ADA/USD) is currently trading at $0.688, attempting to regain traction on its downtrend after a notable bounce off its newly-forming descending trend line. The altcoin has been forming lower highs over the past weeks, with recent sessions showing increased selling interest as the trend line resistance held again.
However, the horizontal support around $0.61-$0.62 has held firm, creating a potential launching pad for a decisive bounce. Price action is currently navigating through a cluster of Fibonacci retracement levels that could determine the success of any breakout attempt.
The immediate support lies at the 38.2% Fibonacci level at $0.64183, which has been tested multiple times in recent sessions. Below this, the 50% extension at $0.61520 represents another potential hurdle for sellers, while the 61.8% level at $0.58857 provides additional support confluence.
Signs Of Bullish Convergence
The moving average configuration is displaying encouraging developments for Cardano’s near-term prospects. The shorter-term moving average (orange line) has been gradually converging with the longer-term average (blue line), suggesting that the selling momentum that characterized the earlier downtrend may be waning.
While both averages are still trending downward, the narrowing gap indicates that a potential bullish crossover could be approaching. Both moving averages are currently positioned above the current price level, acting as dynamic resistance in the $0.70-$0.72 region.
The MACD indicator reveals that bearish momentum has been steadily diminishing, with the histogram showing smaller negative bars in recent sessions. While the MACD line remains below the signal line, the convergence suggests that selling pressure is losing steam.
A bullish crossover in the MACD would provide additional confirmation of a potential trend reversal, particularly if it coincides with a triangle breakout.
Cardano Breakout Potential
The stochastic oscillator shows that Cardano has been cycling through oversold and neutral conditions, currently positioned in the middle range with room to climb toward overbought territory. Recent stochastic readings indicate that the oscillator has bounced from deeply oversold levels below 20 and is trending higher, suggesting that buying momentum may be building beneath the surface.
The pattern of higher lows in the stochastic, despite price making similar lows, could be interpreted as a form of bullish divergence. This technical development often precedes trend reversals and adds weight to the potential breakout scenario from the earlier Cardano double top.
Looking at potential Cardano price targets, a successful break above the triangle’s upper resistance could trigger a measured move targeting the $0.75-$0.80 region, based on the height of the formation. Such a move would likely coincide with a reclaim of the moving averages and could attract significant momentum buying from technical traders who have been waiting for confirmation of a trend change.
Failure to break above the trend line resistance could result in another test of the horizontal support around $0.61520. A decisive break below this level would negate the bullish triangle scenario and could trigger accelerated selling toward the 76.4% Fibonacci retracement at $0.55562 or even the full retracement level at $0.50237.
