Disclaimer: The information presented does not constitute financial, investment, commercial or other advice and represents the author’s opinion only.
Bitcoin [BTC] surprised many market participants last week, posting an impressive 22% rally. Ethereum [ETH] led the bull festival.
After hitting one-month lows, Ethereum shot north by nearly 55% to hit $ 1630. Like Ethereum, Cardano [ADA] also rebounded from just below its range lows.
However, Cardano was unable to overcome the mid-range resistance. At the time of writing, a revisit to the low range it was a possibility for ADA.
ADA- 12 hour chart
The 12-hour chart showed a clear range for Cardano from $ 0.44 to $ 0.64, highlighted in white. The midpoint of the range (dashed in white) lay $ 0.54. A week ago, ADA fell below the minimum range and seemed to retest as resistance.
However, this proved to be a short-term bear trap. Prices quickly jumped higher following the bullish momentum of leaders Ethereum and Bitcoin.
This momentum I could fade somehow both currencies reached their respective resistance levels over the longer period of time.
ADA- 2 hour chart
The fact that ADA was unable to reverse the mid-range level to support would be rather disappointing for the bulls. On the two-hour chart, the move from $ 0.4 to $ 0.54 was used to plot a series of Fibonacci retracement levels (yellow).
They showed that the 38.2% retracement level stands at $ 0.493. At press time, the price had already closed a trading session below this level and appeared to be retesting it as resistance. In the next few hours, ADA could resume its downward movement.
One session close above $ 0.5 it would be a sign of some short term bullying. Furthermore, the $ 0.485- $ 0.505 area has been a bastion in bearish hands. Based on the price action, it looked like a downward movement was brewing.
The 38.2% retracement level was important for the bulls to defend, but the bears took control.
The Relative Strength Index (RSI) also fell below neutral 50 over the two-hour period, to show bearish rise. The bullish crossover on the Stochastic RSI may not mean much in itself.
A bearish crossover can be expected to explore short positions for traders with shorter time frames.
On-Balance Volume (OBV) was again rejected at a resistance level since early July. This meant that the breakout had not really started, even though it had risen to $ 0.54. The Chaikin Money Flow (CMF) also slipped below the -0.05 mark to denote a significant out-of-market capital flow.
In summary, Cardano has enjoyed a strong rebound over the past week, taking it from $ 0.4 to $ 0.54. However, the failure of the OBV to overcome resistance was an indication of the lack of strong demand.
The return below the 38.2% level also indicated a move to the pocket 61.8% -78.6%, $ 0.43 -0.45 area. Aggressive traders can bet on short ADAwith this pocket as a profit target, ea stop loss just above $ 0.5.