Yesterday afternoon, the US Federal Reserve announced a further increase in the main interest rate. However, at 0.25 points, the rate hike is very moderate and therefore directly met the analysts’ forecasts. This is the third time in a row that the central bank has lowered the interest rate adjustment. After the Fed decided to raise interest rates by 0.75 basis points several times in 2022 and most recently set a 0.5 percent increase in December last year, it is the smallest interest rate step since interest rate rounds began .
Some analysts are assuming that the Fed may be nearing the end of interest rate hikes now. With the Fed’s aggressive approach, the main interest rate in the United States of America has reached its highest level in 15 years and is approaching the 5 percent range that some experts consider to be the target range.
At the same time, inflation in the United States of America has fallen significantly recently, so that the central bank can feel confirmed in its actions. However, the target of pushing inflation down to 2 percent is far from being achieved. It will be interesting to see whether the monetary watchdogs will actually end their hard course or make further adjustments to interest rates if inflation does not continue to fall rapidly.
FED interest rate decision drives prices higher
Both equity and crypto markets took a positive stance on yesterday’s decision from the central bank. For example, the American stock index S&P 500, which includes the 500 most valuable listed companies in the USA, climbed yesterday to the highest level since August 2022. The crypto market also showed a clear upward trend and was able sometimes even exceeding $23,000. break the $24,000 mark. At the time of publication, BTC/USD is trading around $23,800.
Many altcoins are also benefiting from the Fed’s interest rate decision. This also includes Cardano buyers. ADA/USD crossed the $0.4 mark. Within 24 hours alone, the price rose by around 5.5 percent, as figures from coincodex.com show. Even more impressive, however, is the growth for the month of January as a whole. The price of Cardano rose almost 60 percent, the best value since the 2021 bull market.
But will this rally continue or will the bears regain strength soon? Analyzing the charts and looking at current indicators for the price gives clues as to where Cardano can be headed.
ADA price at main resistance
Looking at the daily candles, the ADA/USD rate has been on a parabolic rise since December 30, 2022. From the lows of around $0.24, the price has now exploded to a high of $0.41. However, ADA/USD is now at a key resistance zone. Between May and November 2022, the $0.4 price area was the main support for the price of Cardano. This was only broken down during the collapse of the FTX crypto exchange.
If Cardano wants to continue its rally now, the $0.4 level needs to be recaptured as support. Otherwise, it could be a bearish iteration that will trigger a more corrective move for ADA/USD.
A bullish breakout could be imminent
The mentioned mark is also the support line of the descending triangle formation from which ADA/USD broke down on November 8, 2022. However, the price of Cardano has not yet reached the technical price target of this bearish pattern, which is around $0.22. However, if ADA/USD is now able to bullishly break out of the chart pattern, contrary to probability, it could push the price of Cardano below the technical price target of $0.74. To the right of this zone is another key resistance zone for ADA/USD, which was lost as support in May 2022.
What do key technical indicators say about Cardano’s further trend? The Relative Strength Index (RSI) of the Cardano price is currently showing a slight recovery. The overbought area of 70+ has been left and ADA is currently in the neutral zone at 67. In theory this would still leave room for further upside growth. Furthermore, a clear bullish divergence can be seen in the RSI. While Cardano has reached higher and higher prices on the one hand, it is continuously falling from the RSI high of 80 on January 14th. This is a good thing for Cardano buyers.
Cardano’s price is not Golden Cross yet
The 50 and 200 day moving average lines are also a common indicator. If the line of the shortest period crosses the line of the longest period from below, this is considered a bullish line. Someone here talks about a golden cross, which analysts like to use as a buy signal. Currently, however, this golden cross has not occurred, so investors must still wait for confirmation of the upward trend with this indicator.
On the other hand, the hash ribbons have a buy signal. The indicator tries to identify periods when prices have reached very low rates and when capitalization is questionable. On January 14, Cardano price hash ribbons showed a buy. This is generally a good sign. However, the indicator has recently been wrong. The Hash Ribbons predicted a good time to buy Cardano as early as August 2022. But as is well known, things turned out differently and another sharp correction followed.
There is also no bullish signal on the weekly chart if you look at the EMA ribbons. This indicator describes 8 price averages at the same time, which are shown on the chart in colored bands. Usually, in a bull market, the price sits above the EMA bands and they are used as support for further price gains. Currently, however, ADA/USD is still far below these bonds and they are being tested. However, it could take some time before a bullish “flip” occurs, because the upper band is currently priced at 0.6 dollars.
All in all, Cardano’s course is about to make an important decision. A clear break above $0.4 could quickly move higher. Otherwise, however, a larger correction is also possible in the short term.
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