Cardano (ADA/USD) has staged a strong rally so far this week, breaking decisively above a long-term descending trend line that had been capping upside momentum for several months.
The altcoin is currently trading around $0.8197, approaching a critical resistance zone highlighted in blue that could determine whether this breakout has the sustainability to drive prices significantly higher.
SMA Momentum Shift
The cryptocurrency is now testing the upper boundary of what appears to be a major resistance zone around the $0.82-$0.85 area, which coincides with previous swing highs and could serve as the next critical inflection point.
The moving average configuration has undergone a notable shift, with Cardano now trading above both the blue 100 SMA and red 200 SMA after an extended period of consolidation below these key levels. The shorter-term moving average appears to be crossing above the longer-term average, forming a bullish crossover that typically indicates the path of least resistance is shifting to the upside.
This moving average crossover, combined with the trend line breakout, provides multiple layers of technical confirmation that the bearish phase may be giving way to renewed bullish momentum. The fact that price is now holding above these dynamic support levels suggests that any pullbacks could find buyers stepping in, potentially using these moving averages as launching pads for the next leg higher.
The longer-term ascending trend line support, marked in black at the bottom of the chart, continues to provide a structural floor for the overall uptrend. This support level has been tested multiple times throughout the charted period and has consistently held, reinforcing the notion that Cardano maintains a bullish bias on the larger timeframe despite the recent sideways consolidation.
Building Upside Momentum
The stochastic oscillator presents an encouraging picture for bulls, with both the %K and %D lines positioned in the upper half of their range and showing signs of positive momentum. The oscillator appears to be emerging from a period of consolidation and has room to climb before reaching overbought territory, suggesting that the current rally could have additional upside potential.
Meanwhile, the MACD histogram shows expanding positive bars, indicating that bullish momentum is accelerating. The MACD lines appear to be converging above the zero line, which typically supports the continuation of upward price movement. This momentum-based confirmation adds credibility to the technical breakout and suggests that the recent rally is backed by genuine buying interest rather than short-covering alone.
From a strategic perspective, the key level to watch is the blue resistance zone around $0.82-$0.85. A sustained break above this area could open the door for a test of higher resistance levels and potentially signal that Cardano is entering a new bullish phase.
Conversely, a rejection at current levels might result in a pullback to retest the broken trend line as new support, which would be a healthy development for the overall uptrend structure. For now, however, claims of misappropriation against Cardano’s founder appear to be keeping gains in check until the audit results could provide more clarity.