Cardano Price Must Flip $0.4 Back To Support To Secure The Uptrend

Cardano (ADA) was sealed in a steady uptrend as it moved within the confines of an ascending parallel channel. The price was suppressed by the channel's middle boundary capping gains for the Layer 1 token, and the price from moving higher. Bulls were required to overcome this barrier to secure the uptrend for ADA.

Cardano Bulls Eye A Return To $0.5

The ADA price action has recorded a series of higher highs and higher lows over the last three weeks, leading to the appearance of an ascending parallel channel on the daily timeframe. As long as the smart contracts token continues to trade within the confines of the channel, it could move higher.

Nevertheless, the resistance presented by the middle boundary of the governing chart pattern at $0.4 is hindering the rally. This has caused the Cardano price to halt at $0.397 at the time of writing.

Increased buying from the current levels would see the altcoin shatter the $0.4 resistance to confront resistance from the upper boundary of the rising channel at $0.42. Overcoming this barrier would confirm a bullish breakout clearing the path for a sustained uptrend.

A decisive close above the $0.42 supplier congestion zone could see Cardano climb higher to tag the $0.5 psychological level, levels last seen in November just before the collapse of Sam Bankman-Fried's crypto empire, the FTX crypto exchange. Such a move would represent a 26.81% ascent from the current price.

ADA/USD Daily Chart

The Relative Strength Index (RSI) supports the bullish narrative for Cardano price with its upward traction. Its position above the mean line at 60 suggests ADA is now under the control of buyers. Similarly, the Awesome Oscillator (AO) was moving in the positive region to show that bulls were leading the market.

Also supporting Cardano's bullish outlook was the robust support it enjoyed on the downside. The region between $0.35 and $0.361 was a significant demand zone. Note that this is where the 50-day Simple Moving Average (SMA), the 100-day SMA and the 200-day SMA all sat. This was a relatively strong defense zone that could absorb any selling pressure threatening to pull ADA lower.

On the downside, if the Cardano price bows to the overhead pressure exerted by the $0.4 resistance level, it could lose part of the gains garnered in the recent rally. A drop toward the $0.387 support level could see ADA lose the support offered by the lower boundary of the ascending channel. Such a move would invalidate the bullish thesis.

In highly bearish cases, the Ethereum killer could revisit the 50-day, 200-day, and 100-day SMAs at $0.361, $0.355 and $0.351, respectively, or even tag the March swing low at $0.30. This would constitute a 24.5% drop from the current levels.