Cardano (ADA) is showing signs of a potential breakout as it targets the $1.137 level, with rising investor optimism driven by both bullish technical patterns and Cardano founder Charles Hoskinson’s defense of the network’s redemption mechanisms.
Cardano Price Analysis Targets $1.17
Cardano’s price saw a 1.34% increase on May 13, currently standing at $0.821. The altcoin’s bullish momentum has been building following a 19% surge last week. However, short-term resistance at $0.837 has led to consolidation, temporarily halting the formation of an inverted head and shoulders pattern on the 4-hour chart.
This bullish pattern, which features a neckline around the $0.75 level, suggests a breakout could take ADA toward a target of $1.137, marking a nearly 50% increase from the neckline. The previous peak near $1.137 aligns with this target, making it a key level to watch. However, ADA will need to break through the $0.837 resistance to trigger the next upward move. In the meantime, a minor resistance level exists around $0.983, just below the psychological $1 mark.
The Moving Average Convergence Divergence (MACD) and signal lines are preparing for a positive crossover, further supporting a potential uptrend. Additionally, the Relative Strength Index (RSI) has recently reversed after dropping from the overbought zone, suggesting a resurgence of buying pressure.
Risk of Breakdown: Support Levels to Watch
While the overall outlook for Cardano is bullish, the price could face a potential 20% drop if it fails to hold the $0.75 support zone. In this scenario, ADA could fall toward the $0.647 level, with the next support at $0.60. Traders should be cautious of a breakdown, especially if the price fails to maintain momentum above key support levels.
Open Interest Nears $1 Billion, Indicating Strong Bullish Sentiment
The optimism surrounding ADA is further reflected in the rising Open Interest (OI) in ADA futures, which has surged by 6.61% to $987 million, approaching the $1 billion mark. The increase in OI, along with a spike in the funding rate to 0.0141%, indicates growing confidence among derivatives traders, many of whom are anticipating an uptrend continuation for ADA.
Charles Hoskinson Defends Redemption Mechanism, Boosting Confidence
In addition to technical indicators, Cardano’s development team, led by founder Charles Hoskinson, is fueling investor optimism with strong statements on the network’s ongoing upgrades. Hoskinson recently defended the decision to transition the redemption process for unclaimed Genesis UTXOs (vouchers) from an on-chain to an off-chain sweep. This change, part of the Shelley upgrade, aims to reduce fraud risk by streamlining the redemption process and ensuring compliance.
Hoskinson emphasized that the communication around the redemption mechanism had been transparent with the voucher holders, addressing rumors and reinforcing confidence in Cardano’s long-term vision.
Conclusion:
Cardano is currently poised for a potential breakout, with technical indicators, a rising derivatives market, and strong leadership signaling optimism. If ADA can break the $0.837 resistance, the $1.137 target seems within reach. However, traders should stay alert to support levels and potential risks of a pullback if the $0.75 zone fails to hold.
Investors should monitor the developments closely, as any move above the $1 mark could mark the beginning of a more substantial rally for Cardano in the coming weeks.
Related topics:
Shiba Inu Inflows Surge 2,952% – Is a Bull Run Coming?
