Cardano (ADA/USD) has shown signs of recovery after finding support near the $0.7550 area, with the cryptocurrency currently trading at $0.7771.
The digital asset appears to be staging a comeback following a steep decline from its recent swing high of $0.8424 and break below the $0.8000 major psychological level, though significant technical hurdles remain ahead.
Near-Term Area Of Interest
The recent correction has seen Cardano respect key Fibonacci retracement levels drawn from the major swing low at $0.7448 to the swing high at $0.8424. After experiencing a sharp decline, ADA is now testing the 38.2% retracement level at $0.7821.
This 38.2% Fibonacci level represents immediate resistance for Cardano, with the highlighted blue zone on the chart indicating a historical support/resistance area around $0.7700-$0.7800 that is currently being tested.
A decisive break above this zone could pave the way for further gains toward the 50% retracement at $0.7936 near the $0.8000 major psychological resistance. Further resistance levels include the 61.8% Fibonacci retracement at $0.8052, which coincides with the 100 SMA (blue line). This confluence zone represents a significant technical barrier that must be overcome for the recovery to gain credibility.
On the downside, immediate support lies at the recent lows near $0.7550, followed by swing low level at $0.7448. This area has proven to be a strong floor for Cardano so far, and maintaining position above it is crucial for the bullish case to remain intact.
Early Signs of Reversal?
The moving average configuration shows the 200 SMA (red line) below the 100 SMA (blue line), though both are currently sloping downward. Price has managed to climb above the 200 SMA in the recent bounce, which could provide dynamic support going forward. However, the 100 SMA at approximately $0.8050 may act as significant resistance, coinciding with the 61.8% Fibonacci level.
The MACD indicator (middle panel) shows the blue line beginning to converge with the orange signal line after a prolonged bearish phase. The histogram bars are becoming less negative, suggesting diminishing selling pressure. While not yet in bullish territory, this convergence indicates potential for a bullish crossover if the current momentum continues.
The stochastic oscillator in the lower panel has recently formed a bullish crossover from oversold territory. The blue line has crossed above the orange signal line and both are now moving upward, indicating increasing buying momentum. This technical signal often precedes price recoveries and suggests that the market sentiment may be shifting in favor of the bulls.
Volume analysis shows modest green bars appearing on recent upward price movements, though a more substantial increase in buying volume would be needed to confirm the validity of the recovery. For the current upward movement to develop into a sustained trend reversal, increased participation from buyers is essential.
If ADA can successfully break above this resistance zone with increased volume, the recovery could extend toward the 50% and 61.8% Fibonacci levels at $0.7936 and $0.8052, respectively. Clearing these hurdles would significantly strengthen the case for a trend reversal, especially as Cardano’s development company has teased ‘several dozen deals’ coming this summer and fall.
