After recovering from its local lows, Cardano (ADA) is retesting a key area that could send the price to the next crucial resistance. Some analysts suggest that the cryptocurrency is preparing for a massive rally.
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Cardano Retests Key Resistance
Following last week’s drop to the $0.70 support, Cardano is attempting to break out of a crucial resistance level to continue its rally. The cryptocurrency has surged 8.8% from Friday’s low, retesting the $0.74-$0.76 area throughout this week.
Notably, ADA has been hovering between the $0.65-$0.85 price range since the Q2 market recovery, briefly losing this area during the June pullback. However, the July market pump sent the altcoin to a four-month high of $0.93, sparking bullish sentiment among investors.
Since then, Cardano has been in a downtrend, attempting to break out of the descending resistance for the past two weeks. Market watcher Sebastian noted that the cryptocurrency has repeatedly retested the $0.76 zone over the past few days, suggesting that “the more it tests it, the higher the likelihood to break it.”
According to the analyst, ADA must reclaim the 50-day Moving Average (MA), which has served as a strong resistance and support level and coincides with the descending resistance breakout area.
Following today’s performance, the altcoin has reclaimed the 50 MA indicator and eyes a retest of the $0.76 resistance. A breakout from this level would set the stage for a retest of the next crucial area between $0.79 and $0.80. “Getting back above $0.80 would confirm the trend reversal,” Sebastian affirmed.
Meanwhile, a rejection from this area could propel Cardano to retest the recent lows and risk losing its local range again.
ADA Breakout Eyes 85%-120% Rally
Man of Bitcoin noted ADA’s recent performance, asserting that it is “now potentially working on a small 1-2 setup.” Based on this, he suggested that “as long as the price remains above the last swing low at $0.685, wave-5 of iii should follow next.”
Meanwhile, analyst Ali Martinez highlighted that the cryptocurrency has been trading within a descending channel since its December 2024 high of $1.32. According to the chart, ADA retested the channel’s upper boundary for the first time in months during the July breakout but was ultimately rejected.
Reclaiming the $0.76 could propel the altcoin to the channel’s resistance, and “a breakout above $0.84 could set Cardano on a path toward $1.30.”
Additionally, Martinez asserted that “ADA is showing the same price structure as the last cycle, only this time, it’s unfolding more gradually. And it feels like we’re right at the beginning of an explosive move.”
Similarly, Crypto Bullet stated that Cardano has been following a pattern over this cycle. Per the chart, the cryptocurrency has been trading down for months before breaking out and reaching new local highs.
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Last month, the cryptocurrency broke out of its eight-month downtrend, targeting a rally toward the $1.60 area. Now, ADA is retesting the descending resistance line, which could set up the stage for the 120% jump if the breakout is confirmed.
As of this writing, Cardano is trading at $0.74, a 3% increase in the daily timeframe.
Featured Image from Unsplash.com, Chart from TradingView.com
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