Cardano price presents a bullish buying opportunity as ADA nears a stable support floor [Video]

Cardano price has formed a bottom reversal pattern, suggesting a 14% rally is likely.
On-chain metrics suggest this run-up is likely but not sustainable.
A breakdown of the $1.20 support level will invalidate the bullish thesis.

Cardano price, like Solana, has set up a bottom reversal pattern, indicating a trend change is likely. A bounce off the immediate support floor will kick-start the bullish outlook for ADA and propel it to retest a crucial resistance barrier.

Cardano price to go against the wind

Cardano price tagged the $1.29 support level thrice since December 29, 2021, resulting in a triple bottom setup. This technical formation suggests that the downtrend is at an end and that a new uptrend is likely.

The journey toward North is plagued with resistance levels at $1.42, $1.47 and $1.50, indicating that ADA will face an arduous time. Despite the headwinds, ADA will likely rally 13% to retest the 50-day Simple Moving Average (SMA) at $1.47.

ADA/USDT 4-hour chart

Supporting this move to $1.47 is IntoTheBlock’s Global In/Out of the Money (GIOM) model, which shows a significant cluster of underwater investors present from $1.43 to $1.60. Here, roughly 408,000 addresses purchased 5.02 billion ADA and are “Out of the Money.”

While Cardano price can push through to these levels, it is unlikely to sustain here, as these holders might want to break even.

ADA GIOM

Further depicting the long-term bearish outlook for Cardano price is the steady decline in the number of large transactions worth $100,000 or more since November 1. These transfers, which serve as a proxy to institutional investors, have dropped from 6,630 on November 1 to 2,730 on January 3, representing a 58% drop, revealing the disinterest in ADA.

ADA large transactions

While things are looking up for Cardano price from a short-term perspective, the long-term outlook looks dreadful. A breakdown of the $1.20 support level will invalidate the bullish thesis and could trigger a 12% crash to the $1.05 support level.

Share: Cryptos feed

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Join Telegram