The ADA price is bouncing from a major area of support. If history is anything to go by, Cardano may be about to rip higher.
Cardano (ADA) is finding strong support at the psychological $1.000 level. After hitting a buck yesterday, ADA has reversed higher, adding 11% to $1.1120.
Furthermore, there are signs Cardano could go a lot higher.
July has been tough on cryptocurrency investors. Prices had performed well approaching America’s 4th of July Independence day celebrations.
Cardano had rallied 50% in the two weeks following the 22nd of June $0.989 low. However, after the parties of the 4th, the crypto market suffered an extended hangover, and ADA slumped over 30% to yesterday’s 1.073 low.
The decline is undoubtedly due to Bitcoin’s reversal from $36,400, culminating in the market leader losing the $30,000 mark yesterday.
However, over the last few days, I am starting to believe the negativity sweeping the market may be unjustified. This morning, BTC has recovered the important $30k threshold and is working its way higher towards $31,000.
And should this continue, it will drag the rest of the market higher.
Cardano price forecast
Looking at the daily chart, one thing is apparent. Cardano is at a major support level. A trend line from February sits just below the price at $1.0027.
The previous four touches of this support triggered substantial rallies. The ADA price bounced 108% on average following a test of this support. Therefore, I will be paying close attention to the price action in the next day or two.
“History Doesn’t Repeat Itself, but It Often Rhymes” – Mark Twain
Of course, past performance is no indication of future results. But considering the significance of this support, I believe a rally is approaching.
However, on Monday, Cardano slid below the 200-day moving average at $1.1510. Furthermore, yesterday’s decline cemented the breakdown.
Although, the price continues to respect the supportive trend line and may soon reclaim the 200 DMA. And should that happen, we may be in for an upside surprise.
Another sign the price may advance is the Relative Strength Index (RSI) which has turned higher from yesterday’s oversold 28.60 reading and now pointing skywards.
A close above the 200 DMA would set the price on a course to the independence day high at $1.4980. Therefore, buyers may wish to open positions above $1.1510 and stop below $1.0000 for an attractive risk versus reward trade. Furthermore, if Bitcoin’s recovery continues, Cardano may exceed $1.5000, making the trade even more appealing.