Cardano Signals Strongest Buy Opportunity in a Month Aims for 5
After several months of trading below $1, there are indications that Cardano (ADA) could experience a significant rally based on its technical setup. An analyst from TradingShot observed that ADA has triggered a powerful buy signal on its weekly time frame, with a target price of around $5. This signal is particularly noteworthy as it marks the first bullish cross on Cardano’s one-week Logarithmic Moving Average Convergence Divergence (LMACD) since October 2023, suggesting a major upward move could be on the horizon.
The bullish cross on the 1W LMACD is considered one of the strongest long-term buy signals and resembles conditions seen during the previous bull cycle that propelled Cardano to new highs. Furthermore, ADA has been consolidating below its 50-week moving average (MA50) since May, which typically precedes a breakout, similar to previous rallies.
On the other hand, the one-week Relative Strength Index (RSI) for the DeFi token has been ranging, indicating a period of accumulation in the market. This neutral RSI suggests that once buying momentum picks up, ADA has the potential to initiate a new rally.
The analysis also highlights the formation of a bullish megaphone pattern alongside the 1W MA50 and MA100. This pattern indicates that Cardano could be at the beginning of a parabolic rally that may lead to new highs, with the $5.00 price level identified as a possible target for this cycle.
In the short term, ADA has been experiencing a bullish price trajectory, breaking out from a descending channel. This breakout has been anticipated for some time and has led to predictions that the crypto will continue its momentum, with a target of $1.
Apart from the technical outlook, ADA is also expected to benefit from ongoing network development on the Cardano platform. The number of smart contracts on the network has increased to over 70,000 in 2024, and the completion of the first leg of the Chang hard fork has further enhanced decentralized governance, positioning Cardano to compete with established entities like Ethereum.
As of now, Cardano is trading at $0.37, showing a gain of over 5% in the last 24 hours and almost 12% on the weekly chart. The price movement indicates a short-term bullish momentum as it trades above the 50-day SMA of $0.348. However, it remains below the 200-day SMA of $0.463, signifying a long-term downtrend.
To confirm the bullish momentum suggested by experts, ADA would need to break above the 200-day SMA, indicating a stronger rally. Failure to do so may result in continued consolidation or downward pressure.
