recent ADA breakout could trigger rally

Cryptocurrency Cardano (ADA) could be poised to record a 15% rally following the sharp 7% rise seen on Monday, according to technical indicators and on-chain metrics.

Analyst Manish Chhetri believes that the recent price action of the so-called “Ethereum-killer” formed a double-bottom technical formation and broke the key resistance at $0.47. According to him, this is a bullish sign also supported by increased activity on the network.

“The Cardano price, in the four-hour period, broke the $0.47 resistance level on Monday and remained above it. From May 10th to May 15th, the Relative Strength Index (RSI) showed a bullish divergence with the price, when the RSI makes higher lows and prices form lower lows,” he said.

According to the analyst, this indicates an increase in bullish momentum. This way, a move above the oversold area can act as a catalyst for a new long position.

In the first days of May, Cardano price peaked at $0.47 after bouncing twice from the $0.42 support level. For the analyst, this ‘W’ shaped structure (double bottom pattern) is a bottom reversal pattern. This pattern often suggests a possible trend reversal, favoring buyers.

“If the bullish momentum persists and ADA manages to break resistance at $0.52 – an April 22 daily high and the April monthly pivot level – a 15% rally to $0 is likely. 60, the high of April 11”, he explained.

Cardano Price Analysis

In case of a decline, the Volume Profile indicator shows that the range between $0.47 and $0.45 is a good support zone. He highlights that this area hosts the highest level of trading volume, making it a good spot for investors to buy the dip.

“To add more credibility to this area, the 61.8% Fibonacci retracement level at $0.45 also roughly coincides with this area, making it a high probability reversal zone,” the analyst highlighted.

Cardano’s on-chain metrics add more strength to the bullish thesis. According to data from IntoTheBlock there was a sharp increase in active addresses, from 21,640 on May 12th to 38,620 on May 20th. “This suggests that demand for Cardano is growing,” commented Chhetri.

The number of transactions by large investors, or those exceeding $100,000, can also give clues about future price action. Thus, according to the analyst, there was an increase in ADA transactions. This shows that whales are accumulating ADA tokens, which also indicates a rally.