Cardano’s cryptocurrency ADA has experienced a period of consolidation in the last week and month, with gains of around 3.65% and 3.69%, respectively. However, a recent uptick has seen ADA rise by 4.94% in the last 24 hours, prompting speculation about the sustainability of this positive momentum.
One pressing question now arises: How sustainable is this upward trend? ADA seems to be nearing a critical supply zone that could dictate its price movement in the near future.
Upside or Downside Potential: Insights from the Technical Chart
ADA has recently entered a supply zone on the chart, a crucial level where significant selling pressure might lead to a price decrease.
This supply zone is identified between $0.3680 and $0.3823, which ADA must surpass to target $0.4158.
In case ADA fails to breach this level, a downward trend could drive the price towards $0.3566, a level likely to offer support and potentially trigger a rebound.
Presently, market sentiment remains largely positive, with traders displaying a bullish bias, pointing towards potential attempts to breach the supply zone.
Increasing Bullish Indicators at the Core
Key indicators reflecting ADA’s bullish momentum, including Open Interest and Funding Rate, have demonstrated notable increases, suggesting a possible upward price movement.
As of the latest data, Open Interest (OI) has surged by 6.49%, scaling up to $252.62 million. Such an uptick signifies sustained bullish momentum, historically aligning with upward price trajectories.
OI represents the volume of unsettled derivative contracts linked to an asset, offering insights into market sentiment. A percentage rise, as seen in ADA’s case, typically indicates a bullish stance.
Moreover, the funding rate, indicating the periodic payments amid traders in perpetual futures, currently stands positively for ADA at 0.0132%, as per Coinglass data. This further reinforces the positive market outlook for the asset.
Potential Market Retraction Anticipated for ADA
Based on the Relative Strength Index (RSI) readings, ADA might encounter a decline in the forthcoming trading sessions.
The RSI currently hovers around 67.36, nearing the overbought territory above 70. A breach of this threshold could signal a price decline in the near term.
If this scenario unfolds, a retreat from the current supply zone could steer ADA towards a lower support level.