Cardano (ADA) price bullish breakout of long-term resistance line and target $0.425. However, the near-term price outlook looks bearish due to the emergence of a bearish pattern.
Last week, Cardano developers confirmed their intention to launch the Djed stablecoin in January 2023.. Thus, this month may turn out to be a landmark in the history of the project.. Recall that Djed is a super-backed algorithmic stablecoin based on Cardano.. The test version of the digital asset was presented in December 2022. As the developers promise, the size of the excess collateral of the stablecoin will be 400% – 800%
Against this backdrop, the Cardano (ADA) rate has recently been demonstrating active growth, perhaps in anticipation of the imminent launch of a stablecoin.
Cardano breaks 256-day resistance line
According to the results of technical analysis, the Cardano (ADA) rate has been declining along the descending resistance line since May 10 and hit a low of $0.238 on December 30. However, the price went up after that.
During the decline, the market bounced off this line four times (red icons). The last time it happened was January 14th.. With each such touch, the lines become weaker, which helped the ADA rate break through on January 20 and reach a high of $0.387 on January 22.. The next resistance is at $0.425.
At the time of the bullish breakout, the line was 256 days old.. Breakouts of such long-term structures often cause a significant price increase.. A break of the $0.425 area could potentially accelerate the pace of such gains.
However, price dynamics and technical indicators are somewhat inconsistent with each other.. Despite Bullish Breakout, Daily RSI Signals Bearish Divergence (Green Line). In addition, it can drop below the 70 mark.. Both of these signals are considered bearish.
Thus, in order to deal with the current situation, an analysis of shorter timeframes will also be required.
Source: TradingView Short-Term ADA Outlook: Pullback Before Rise
The situation on the 6-hour chart suggests that Cardano may initially decline and only then resume growth.
This scenario is supported by the fact that ADA is trading inside an ascending parallel channel.. This pattern is considered bearish. In addition, the RSI is signaling a bearish divergence (green line).
Now the ADA price is near the channel resistance line. A price drop below its median line would indicate a bearish breakout.. This could happen within the next 24 hours.
In this case, Cardano may fall to the Fibo 0.5 correction level at $0.313. There is also an area of horizontal support.
Source: Trading View
Thus, in January, the ADA rate shows an active growth. Perhaps this is due to the expectation of positive updates in the network of the Cardano project. However, the short-term outlook for the coin is bearish. This means that the currency may first decline and only then resume growth. A bearish breakout from the ascending channel would confirm this scenario.
On the other hand, a bullish break out of the channel would cancel the short-term bearish scenario and target bulls at $0.425.
Earlier, the editors of BeInCrypto said that the Ethereum (ETH) rate was targeting the $2,000 mark in anticipation of the Shanghai update.
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