TLDR
- Cardano price has increased above $0.7250 but faces resistance around $0.760
- A key bearish trend line is forming with resistance at $0.7580
- Daily active addresses and DEX trading volume are declining
- ADA is trading above the 100-hourly moving average but momentum indicators show bearish signs
- Support levels exist at $0.7420, $0.7260, and $0.710
Cardano (ADA) is currently attempting to gain momentum after a recent price increase, though it faces several key technical hurdles that could determine its short-term price direction. The cryptocurrency has managed to climb above the $0.7250 and $0.7320 resistance levels in recent days, showing some positive movement despite underperforming compared to Bitcoin and Ethereum.
The price action started from the $0.710 level, clearing the 50% Fibonacci retracement level of the recent decline from the $0.7762 swing high to the $0.7110 low. Currently, ADA trades above $0.740 and the 100-hourly simple moving average, suggesting some underlying strength.
However, a key bearish trend line has formed with resistance at $0.7580 on the hourly chart. This creates a significant barrier for any continued upward movement. The $0.760 level serves as the first major resistance, representing the 76.4% Fibonacci retracement level of the recent decline.
The MACD indicator for ADA/USD shows gaining momentum in the bullish zone, while the hourly RSI sits above the 50 level. These technical indicators provide some hope for bulls, though the overall picture remains mixed.
On-Chain Metrics Paint Bearish Picture
On-chain data suggests potential weakness ahead for Cardano. Daily active addresses have dropped significantly, falling to 23,644 on Tuesday from 35,696 on May 14, extending a downtrend that began in early March.
This decrease in network activity typically signals lower demand for blockchain usage, which can pressure prices downward. When fewer users interact with the network, it often correlates with reduced buying interest.
Similarly, DEX trading volume on the Cardano chain has been consistently falling since early December, currently reading just $3.06 million. The decline in trading volume points to decreased user activity and liquidity in the ADA ecosystem.
These fundamental metrics support a bearish thesis for ADA in the near term, as they suggest waning interest from users and traders alike.
Cardano recently faced rejection around the daily resistance at $0.84 on May 13, leading to a 10% decline over the following four days. This level coincides with the 50% Fibonacci retracement (drawn from the March 3 high of $1.17 to the April 7 low of $0.51), making it a critical resistance zone.
ADA found support around its 200-day Exponential Moving Average (EMA) at $0.71 on Sunday, which now serves as a key support level. A break below this level could trigger a more significant correction.
The Relative Strength Index on the daily chart reads 49, slipping below the neutral level of 50, indicating increasing bearish momentum. The MACD indicator supports this outlook, having shown a bearish crossover on Sunday.
If Cardano fails to climb above the $0.760 resistance, another decline could begin. Immediate support sits at $0.7420, with further support at $0.7260 and $0.710. Should ADA break below $0.7260, it could test the $0.710 level, with the next major support at $0.680.
However, if the price clears the $0.760 resistance zone and the trend line, it could start a stronger rally. A close above $0.7720 might open the path toward the $0.80 region, with further potential to reach $0.8250 in the near term.
While short-term price action shows some bullish momentum, the declining on-chain metrics and technical indicators suggest caution for Cardano investors.
The price now hovers at a critical juncture, with the 200-day EMA at $0.71 representing a crucial support level. If this level holds, recovery toward $0.84 remains possible.
For now, traders should watch the key resistance at $0.760 and the support at $0.71, as a breakout in either direction could determine the next significant move for Cardano.
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