Cardano Could Retrace Before Higher Highs
Cardano looks poised for a brief correction that could help it gain the liquidity to advance higher.
Key Takeaways
- Cardano has surged by nearly 25% over the past week.
- Bullish momentum is building ahead of Cardano's Vasil hard fork.Â
- Still, technical indicators suggest ADA could retrace before printing a new local high.Â
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Cardano looks bound for a spike in profit-taking as it struggles to slice through stiff resistance. Still, any possible correction could be short-lived as speculation mounts around the upcoming Vasil hard fork.
Cardano Hits Stiff Resistance
Cardano appears to be enjoying significant bullish momentum as the network inches closer to the anticipated Vasil hard fork.
The development firm behind Cardano, IOHK, revealed that it had successfully delivered a new node release for the upcoming upgrade. With the final testing processes underway, the team of developers is assessing whether to release Vasil on the Cardano testnet. The goal is to “ensure that any changes do not adversely affect functionality for the dApps that are already live on the network.”
ADA has risen nearly 25% over the past week as it enters one final stretch before the hard fork. It went from a low of $0.54 on Jun. 3 to hit a high of $0.66 yesterday. Now, it appears that Cardano could be bound for a brief correction before resuming its uptrend.
On the 12-hour chart, the 100-hour moving average may act as stiff resistance, preventing ADA from advancing further. Meanwhile, the Tom DeMark (TD) Sequential indicator presents a sell signal in the form of a green nine candlestick. The bearish formation anticipates a one-to-four candlestick correction.
A spike in sell orders that pushes Cardano below $0.63 could serve as the first sign of validation for this bearish thesis. Dropping below such a vital support level could encourage investors to book profits, increasing downward pressure. If this were to happen, ADA would likely drop a further 10% to $0.55.
Although the odds appear to favor the bears, Cardano will have a chance of invalidating the pessimistic outlook by slicing through the 100-hour moving average. Moving past this level and printing a 12-hour candlestick close above $0.69 would likely lead to higher highs, pushing ADA toward $0.82.
Disclosure: At the time of writing, the author of this piece owned BTC and ETH.
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