Cardano Faces a Hurdle Before New All-Time Highs

Key Takeaways

• Cardano has endured a week-long consolidation period. 
• The $2.98 resistance level has managed to keep ADA from resuming its uptrend.
• Transaction history shows stable support, favoring the bulls. 

Cardano is up nearly 3% since the beginning of the daily trading session as a new wave of volatility has struck the cryptocurrency market. Regardless of the recent gains, one technical indicator shows that ADA has a barrier to overcome before it can make new highs. 

Cardano Must Overcome Resistance

Cardano appears to have entered a consolidation period after surging to a new all-time high of $2.98 on Aug. 23. Since then, it’s been making a series of higher lows, while the $2.98 resistance level has prevented it from advancing further.

Such market behavior seemingly formed an ascending triangle on ADA’s four-hour chart. A horizontal trendline can be drawn along with the swing highs and a rising trendline along with the swing lows.

An increase in buying pressure around the current price levels could have the strength to push Cardano beyond the overhead resistance at $2.98. In this eventuality, ADA could advance by nearly 16.3% to make a new all-time high of $3.43. 

This target is found by measuring the distance between the two highest points of the triangle and adding it to the breakout point. 

Source: TradingView

Transaction history shows that as long as the demand barrier that extends from $2.74 to $2.82 holds, the odds will favor the bulls. IntoTheBlock’s In/Out of the Money Around Price (IOMAP) model shows no significant supply barrier ahead of Cardano that will prevent it from achieving its upside potential. 

Still, the third-largest crypto by market cap needs to continue trading above the $2.74 to $2.82 range to prevent 91,500 addresses from selling the 2.4 billion ADA they acquired around this price level. 

Source: IntoTheBlock

Breaking below this crucial demand barrier may encourage investors to exit their positions to avoid seeing their investments go “Out of the Money.” A sell-off could instead lead to a 16.3% correction that pushes Cardano towards $2.40.