Skip to content

Cardano might be gearing towards $2 as trend reversal indicators kick in

Cardano (ADA) might be gearing towards $2 as trend reversal indicators kick in

Cardano (ADA), the sixth-largest cryptocurrency, by market capitalization, has seen a significant loss in value since September, shortly after reaching a new all-time high of over $3. After declining to a low of $1.23 on December 20, it has rebounded as Bitcoin also recently moved up past the $50,000 mark. As of December 27, Cardano is witnessing bullish sentiments that pushed ADA over 8% in the last 24h.

In this analysis, we’ll overview some technical indicators to give you a general idea of what is likely to happen in the short term for ADA. For the purpose of the analysis, we will be using the 24-hour (daily) timeframe in order to get a fairly accurate picture of the asset’s behavior on a zoomed-out chart.

Relative strength index (RSI) shows room for growth

The 14-day Relative Strength Index (RSI) for ADA currently stands at 58.65. While this is not an indication that the asset is oversold, it also does not suggest that it is overbought. It will be considered overbought typically at >70, but again, this is not always the case. 

Therefore, as much as it is not overbought and has room for price growth, it can still retrace if the market decides to move downwards again.

Relative Strength Index (RSI) showing Cardano could still go up. Source: TradingView

MACD indicates trend reversal to the upside

The Moving Average Convergence Divergence (MACD) uses two different moving averages to determine trends. This indicator suggests that ADA has broken out of the downward trend that it entered days ago and could be heading to the upside. 

As seen from the chart below, the MACD (blue line) has crossed over the signal indicator (yellow line) with green bars showing up instead of red. When this happens, it means there is a trend reversal to the upside. Another cross of the yellow line over the blue would indicate a new trend reversal to the downside.

MACD shows Cardano (ADA) has entered trend reversal to the upside. Source: TradingView

Tightened Bollinger Bands starting to open

The Bollinger Bands are momentum indicators that can be used to tell whether an asset is in bearish or bullish momentum. Until recently, the bands have been moving fairly parallel to each other with the price leaning towards the lower. 

This indicates a continuous bearish trend. The bands however contracted towards each other shortly and are now opening up again with the price leaning towards the upper band. 

The tightening bands indicated on the chart show that ADA reached a moment of decision and the opening end with price leaning towards the upper band indicates that the asset is breaking upward, a reversal from the previous bearish trend.

Bollinger Bands confirm Cardano (ADA) is ready for an upward move. Source: TradingView


The above top indicators suggest that ADA has entered a trend reversal from the bearish trend it has sustained for some time now. This would typically lead to a move to the upside as it is already doing, but whether this will be sustained depends on the bulls holding their position against the bears.

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

Best Crypto Exchange for Intermediate Traders and Investors

  • Invest in 70+ cryptocurrencies and 3,000+ other assets including stocks and precious metals.

  • 0% commission on stocks - buy in bulk or just a fraction from as little as $10.

  • Copy top-performing traders in real time, automatically.

  • Regulated by financial authorities including FCA and FINRA.

2.8 Million Users
eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk. eToro USA LLC does not offer CFDs, only real Crypto assets available. Don’t invest unless you’re prepared to lose all the money you invest.

Read Next:

Weekly Finance Digest

Related posts