With Cardano [ADA] approaching a short-term resistance, here’s what you can do

Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be considered investment advice

On 12 May, Cardano whales were highly active and Santiment data showed the largest spike in high-value transactions since January. Was that a buy-the-dip moment, or was it possible that holders could experience further pain down the line? The price is already 31% up from those lows, but the lower timeframe market structure did not really favor the bulls.

ADA- 1 Hour Chart

The Fibonacci retracement levels (yellow) were plotted for ADA’s drop from $0.7 to $0.4 10 days ago. Since this drop, the price has been unable to climb past the $0.6 and $0.58 resistance levels. The price action of the asset in the past few days showed two valuable levels to look out for.

Marked in dotted white, these are the $0.489 lows and the $0.615 highs. In the past week, ADA appeared to range between these two levels, with the $0.54 level also being important in the past week.

At press time, even though ADA was able to climb above the 38.2% retracement level, it still faced resistance at $0.54 and $0.55. Traders could wait for a move to $0.489 to consider buying or a move to the $0.6 area to consider selling the crypto asset.

Rationale

The RSI stood at 56.7 at press time, which hinted at a weak bullish momentum. In the past couple of weeks, the 57.2 and the 34.7 levels have had some importance on the RSI. It would need to climb past 57 as well as the 60 value to show strong bullish momentum behind ADA.

Yet, there did not seem to be such momentum brewing. The MACD was listless in the past few days as it lost steam at the zero line, and the Stochastic RSI was in overbought territory and could form a bearish crossover in the next few hours.

The OBV posted a series of lower highs in the past week to highlight that sellers had the upper hand on the price charts.

Conclusion

The $0.489 and $0.615 levels can be used to trade ADA like a range-bound asset, while breakout traders would want to see a breakout to ride the next trend. Bitcoin would also need to see a strong move in order for Cardano to see a breakout in either direction. As things stood, there was a lack of demand, and another drop could be around the corner.