Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
- The latest plunge saw ADA retest a bullish breaker on the daily timeframe.
- On-chain metrics leaned in favor of accumulation over distribution.
The price action of Cardano remained bullish on the higher timeframe charts, even though it saw a sharp drop in prices a few hours before press time. Bitcoin was unable to climb past the $31k resistance. At the time of writing, it was trading at $29.2k.
Read Cardano’s [ADA] Price Prediction 2023-24
The 4-hour and lower timeframe price charts of many of the top 20 crypto assets were bearish, and Cardano was no exception. But its daily timeframe chart could entice buyers with a good risk-to-reward buying opportunity.
The range breakout and subsequent retest could result in a rally
Source: ADA/USDT on TradingView
Cardano formed a range (yellow) on the charts that extended from $0.24 to $0.42. The mid-point of this range at $0.33 (dashed orange) has been a critical support and resistance level since October 2022.
In the past two weeks, the RSI rose above 70 and the OBV also saw a pullback after posting a large upward spike. This showed strong demand and bullish sentiment behind ADA. With the RSI still above neutral 50 and the price in an uptrend still, bullish prospects looked encouraging.
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A bearish order block on the daily timeframe was highlighted in cyan. It was broken on 13 April and at the time of writing was retested as a bullish breaker. It has confluence with the range highs at $0.42, making the entire $0.38-$0.42 an extremely strong demand zone.
The failure of this zone would be evident upon a daily session close beneath $0.38. On the other hand, a bounce from $0.42 was likely to reach $0.52.
MVRV ratio began to fall and dormant circulation didn’t ring alarm bells yet
Source: Santiment
The 90-day MVRV ratio reached close to the highs from January but began to decline sharply in the past few days. The mean coin age has been rising since 7 April, which was a sign of network-wide accumulation.
Moreover, the dormant circulation metric did not show noticeable spikes despite ADA’s rejection at $0.455. This showed intense selling pressure was not yet upon us, which can be interpreted as “so-far-so-good” by bulls. The development activity continued unabated, which can hearten long-term buyers.
