Cardano has fared as one of the best-performing major cryptocurrencies this week after surging 20%. This puts it at $0.29, its highest price since August.
With its price down 90% from its all-time high (ATH), could ADA be gearing to explode, or is the recent pump a mere bull trap?
Cardano is moving towards the 200-day EMA after trading below it since May. The EMA acted as resistance in July, causing ADA to dump significantly. However, there has been a recent uptick in trading volume, signaling a growing interest in the project.
If it breaks the 200-day EMA, we will likely see a longer-term reversal to the top of its bear market range between $0.41- $0.45.
However, a break above this range is unlikely until after the Bitcoin halving, when the crypto market is expected to enter a bull rally.
Another interesting consideration is a downtrend breakout on the RSI indicator. This is an early sign of a trend reversal, which increases the likelihood of a longer-term pump when coupled with the other factors.
However, we must also consider that the RSI is within the overbought region, a sign of a potential pullback as buyers become exhausted. If this occurs at the 200-day EMA, we could see a significant downward movement, potentially creating a new bear market low.
TradingView analyst CobraVanguard recently highlighted a wedge breakout and speculated a pullback to $0.27, followed by a pump to $0.32.
Meanwhile, trader MyCryptoParadise_Nathan notes a descending channel break out and points out that the first price target is $0.32. However, the analysis also highlights that a break below its $0.27 level will shift ADA from bullish to bearish, opening the door to a downward trajectory.
Yet prominent YouTuber and crypto analyst Coin Bureau recently predicted that ADA could climb to $24 in the next bull run.
However, we must also consider that Cardano remains in a long-term downtrend, so there remains a risk of further downside movement before the next bull run occurs.
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