Cardano is trading around Q1 2023 highs and looks solid at spot rates. Even so, there are hints of rejection, a development that could slow down bulls.

The daily chart shows ADA is already up 16 percent from February lows and over 70 percent from December 2022 lows. Traders might have to wait for a clear trend definition at this stage.

Any close above last week’s highs and $0.40 would be a bullish breakout formation, setting the foundation for another possible leg up, accelerating the recovery after last year’s losses.

In the short term, last week’s lows and, specifically, Feb. 15 bull bar will serve as primary support. ADA prices may pull back towards January and February critical support levels if breached.

Hydra and Contingent Staking

There is resurgence in Cardano on-chain activity levels. With more dApps launching serving users in DeFi and NFTs, this could support ADA in the short term.

As activity increases, Cardano developers aim to improve scalability as part of the Basho stage. Developers plan to release Hydra, a layer-2 protocol that its creators say would increase Cardano’s processing throughput to over one million TPS. The protocol’s proof-of-concept capabilities were launched last week, demonstrating the layer-2’s processing speeds.

Meanwhile, the community criticizes Charles Hoskinson’s proposal of contingent staking. The response follows Brian Armstrong’s earlier suggestion that the United States regulators would ban retail staking. Cardano is a proof-of-stake protocol, dependent on stakers, retailers and institutions, for security and transaction processing.

Cardano Price Analysis

ADA prices are presently in consolidation. The upper limit is $0.42, while support lies at $0.38 and $0.35. Even though the primary trend is upwards, ADA bulls must first clear last week’s highs, edging up in line with the Feb. 15 bullish engulfing bar.

Any breakout, confirming buyers of last week, must be with rising volumes. In that case, ADA may rally, in a bullish breakout formation, reversing November lows towards September 2022 highs of $0.52.

Conversely, the Feb. 16 bar is a concern. It reversed the losses of Feb. 15, and the bar had high trading volumes. Moreover, ADA prices are currently moving within the bear bar’s range. If bears press on and ADA contracts below $0.38, the coin may slip toward $0.32 in a cool-off.

Technical charts courtesy of Trading View

Disclaimer: Opinions expressed are not investment advice. Do your research.

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Filed under: News - @ February 20, 2023 10:27 am