Cardano (ADA/USD) has staged a notable recovery after touching the lower boundary of its descending channel at $0.6417 (0.00% Fibonacci level), with price action now suggesting a critical juncture as it tests important resistance levels.
The recent bounce has bulls eyeing a potential trend reversal if key barriers can be overcome in the coming sessions.
Cardano Fibonacci Barriers
Currently trading at $0.6799, Cardano is challenging the 38.2% Fibonacci retracement level at $0.6752, having already pushed slightly above this immediate resistance. This level represents the first significant hurdle in ADA’s recovery path and appears to be providing some resistance as price struggles to maintain momentum above it.
The next major resistance level lies at the 50% Fibonacci retracement at $0.6856, which coincides with a previous support zone that has now flipped to resistance. This area represents a critical decision point for Cardano’s near-term trajectory. A sustained break above this level would strengthen the bullish case and potentially open the path toward the 61.8% Fibonacci retracement at $0.6960.
What makes the current setup particularly interesting is how price has responded after reaching the bottom of the descending channel. The sharp rejection from this level and subsequent rally suggests buyers were eagerly waiting to enter at those depressed prices. However, the descending channel remains intact, indicating that the broader downtrend is still technically valid despite the recent strength.
The channel structure is clearly defined with multiple touches on both the upper and lower boundaries. For a true trend reversal, Cardano would need to break above the upper channel boundary, which currently intersects with the 100% Fibonacci retracement level around $0.7295. Until such a breakout occurs, the recent bounce may be viewed as a correction within the larger downtrend.
Momentum Gaining Traction
The moving average configuration presents a bearish picture, with the 100 SMA (blue line) positioned below the 200 SMA (red line), confirming that the path of least resistance remains to the downside from a longer-term perspective. However, price is attempting to push above the 100 SMA, which could signal improving short-term momentum if sustained.
The stochastic oscillator has made a decisive move upward from oversold territory, indicating strengthening bullish momentum. This oscillator is approaching overbought conditions but hasn’t yet reached extreme levels, suggesting there could be room for additional upside before a potential pullback.
Meanwhile, the MACD indicator in the middle panel shows the blue line crossing above the orange signal line, with the histogram transitioning from red to green bars. This bullish crossover reinforces the positive short-term momentum and aligns with the price action off the channel bottom.
With Cardano currently testing the 38.2% Fibonacci level and showing some hesitation, traders should closely monitor price action around this zone, as well as broader cryptocurrency developments in terms of regulatory changes and global trade updates that tend to sway overall risk sentiment.
