Cardano / USD Technical Analysis: Light Steps Ahead
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- Cardano is starting to turn bullish in the short-term with indicators turning higher on the four-hour time frame
- Cautious approach is warranted as a bearish head and shoulders pattern remains in play
- The medium-term outlook for Cardano is still bearish, although bullish divergence is evident on the daily time frame
CARDANO / USD Short-term price analysis
In the short-term, Cardano is bullish with the cryptocurrency starting to trade above its 200-period moving average on the four-hour time frame.
Technical indicators are also rising on the mentioned time frame, which is supporting the overall bid-tone and near-term bullish momentum currently seen in the pair.
A fair degree of caution is still warranted in the short-term horizon when trading the ADA / USD pair as a bearish head and shoulder pattern is still valid across the lower time frames. Buyers will ideally need to move price above the current 2019 trading high to completely negate the bearish pattern.
ADA / USD H4 Chart (Source: TradingView)
Pattern Watch
Traders should watch for a potential test of the ADA / USD pair’s current yearly trading high, the closer traders start to move price towards the head of the bearish pattern, the higher the probability that the pattern will eventually be invalidated.
MACD Indicator
The MACD indicator is bullish on the four-hour time frame and shows further scope for a strong move higher.
CARDANO / USD Medium-term price analysis
In the medium-term, Cardano is bearish with the cryptocurrency in a protracted downtrend with price still unable to stage a meaningful rally away from the worst levels of 2018.
The ADA / USD pair is showing bullish potential, although any forward-looking bullish bias hinges on whether the pair has found a longer-term price floor.
The daily time frame clearly shows bullish price divergence from the summer of last year, which will likely mean a larger upside correction at some stage.
Medium-term bulls must start to rally the pair above its current 2019 trading high and build bullish momentum for an attack on the pair’s 200-day moving average.
ADA / USD Daily Chart (Source: TradingView)
Pattern Watch
If a major technical bottom has formed, traders should watch for a bullish inverted head and shoulders pattern to start to take shape across the daily time frame.
Key Moving Averages
The ADA / USD pair is still trading well below its 200-day moving average, keeping the overall medium and longer-term bearish theme intact despite some bullish signs emerging.
MACD Indicator
The MACD indicator is flat on the daily time frame with no clear trading signal present.
RSI Indicator
The RSI indicator has a slight bearish bias and has been moving to the downside since early January.
Conclusion
Cardano is showing bullish signs in the short-term and may soon start to rally if buyers can sustain upside pressure and momentum.
The medium-term outlook remains bearish, although traders should start to pay attention to some bullish signs that are starting to emerge.
Overall, the ADA / USD pair must start to rally or face a steep decline back towards the worst levels of 2018.
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