- Cardano price recovers the 50-day simple moving average (SMA) amidst yesterday’s rout in the crypto market.
- Yesterday’s 27% decline ranks as the largest since March 2020.
- ADA no longer shows overbought readings on the daily and weekly Relative Strength Indexes (RSI).
Cardano price recovered the 50-day simple moving average (SMA) on a day when most of the cryptocurrencies were struggling to regain their 200-day SMA. It is a notable demonstration of relative strength and solidifies ADA as a leader for the next wave of buying in the crypto market.
Cardano price rewards buy-the-dip investors
On May 5, guided by a 16% gain, Cardano price emerged from a cup-with-handle base, establishing a trend change for ADA following months of consolidation. The initial post-breakout price action was reluctant, but the profile of the daily volume remained unwavering, showing no signs of distribution. The awkward price action was soon reconciled with a powerful, bullish engulfing day on May 13, covering the previous six trading days and closing with a 23% gain.
On May 15, Cardano price reached the measured move target of $2.40, yielding a 65% gain from the cup-with-handle breakout.
The decisive breakout and rewarding rally catapulted Cardano up the leaderboard in May was partially inspired by the bullish attention garnered by ADA’s lesser carbon-intensive ecosystem.
At yesterday’s low, Cardano price had declined 63% from the all-time high on May 16 and 60% for the day, but a 60% rebound closed ADA above the 50-day SMA. The close above the tactically important moving average was a break with the other cryptocurrencies that struggled to close above their 200-day moving average.
In the short-term, Cardano price will be jolted by notable intra-day swings, but as long as it stays above the 50-day SMA at $1.43 and the 2018 high at $1.39 on a daily closing basis, the outlook for ADA is constructive.
Upside targets are limited to the 161.8% Fibonacci extension of the April correction at $2.23 and then the all-time high at $2.51. Other targets need to be evaluated after a new high is printed, considering the length and depth of the preceding consolidation.
ADA/USD daily chart
A daily close below the 2018 high will fundamentally alter the constructive ADA outlook and raise the probability of Cardano price testing the crash low at $0.91 and potentially the April low at $0.89.
In times of crisis, it is imperative to target relative strength because it will structure the portfolio to capture the profit opportunities offered by the emerging leadership as it seizes new highs well ahead of the other cryptocurrencies.