Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be considered investment advice
- A lower timeframe resistance zone has been flipped to support
- Cardano faces stiff resistance up to $0.4, and demand has not yet arrived
Cardano has performed somewhat well in the past three days. The drop beneath $0.34 last Friday was followed by a short-term rally over the weekend.
Here’s AMBCrypto’s Price Prediction for Cardano [ADA] in 2022
At press time, Cardano sat atop the $0.35 zone of support. Even though the momentum was bullish on the lower timeframes, there was a lack of buying pressure in recent days. Can the rally continue, or will it reach its zenith soon when the sellers step in?
Liquidity pocket offers interim support as ADA bulls try to drive prices higher
Source: ADA/USDT on TradingView
The higher timeframe charts such as 1-day showed the trend to be bearish. After the move beneath the $0.44 former range lows and the $0.4 support level as well, the bias was strongly bearish.
The technical indicators and price action showed a bullish bias on the lower timeframes such as 1-hour. A visit to the $0.33 support saw a sharp reversal for Cardano. Demand also picked up, and at the time of writing ADA bulls fought with the sellers to drive prices above the $0.36 level.
Highlighted by the white box, a pocket of liquidity at $0.355 was flipped to a support zone in recent days. Just above this zone was a short-term bullish order block, demarcated by the cyan box.
Both of these areas were quite close to the $0.358 level, which was the 78.6% Fibonacci retracement level (yellow).
The RSI has been above the neutral 50 mark as ADA climbed back above the $0.34 mark, and showed short-term bullish momentum. The series of higher lows and higher highs in the past three days also supported the idea of an upward trend.
Yet, the OBV did not show a sharp advance. It struggled to break above the resistance from the past week. This was an indication that, despite short-term bullishness, the buying pressure was not necessarily strong.
Open Interest is slowly on the rise as sellers march onward
Source: Coinglass
Since mid-September, the Open Interest on Cardano futures has been on the rise. At the same time, the price has been in a downtrend from the $0.48-$0.45 territory.
This suggested that short-sellers continued to have confidence in the downward trend and were likely opening short positions along the way.
The price might need to form a range to signal a shift in the longer-term trend. The previous one from $0.64 to $0.44 lasted for nearly five months before breaking out to the south.
