Cardano [ADA] was in a retracement phase after making a new high at $0.258 on the 22nd of August. Recently, AMBCrypto covered the importance of the $0.21 support zone.
Despite a slump in DEX activity, the altcoin has maintained its overall bullish price bias. The price dip below $0.21 reached a low of $0.189 on Sunday, the 30th of August, but swing traders and investors need not panic over this drawdown.
Instead, it could be a buying opportunity. Here’s why.
Cardano buy signals on the daily timeframe
In a post on X, popular crypto analyst Ali Martinez observed that the TD Sequential had fired a buy signal for Cardano on the daily timeframe.
The previous three times the indicator gave a buy signal on this timeframe, a sizable price rally followed. Hence, it was a signal worth paying attention to.
The swing structure on this timeframe was also bullish. ADA has set new swing highs over the past two month, while maintaining the series of higher lows. In other words, it has been trending higher.
The OBV has made higher lows since July, but has not been able to match the May highs yet. The CMF was above +0.05 to signal strong buying pressure.
The price was retesting the $0.20 support zone. This same area had served as resistance in July and again in the first week of August. Therefore, there is a good chance of a bullish price reaction from this zone.
Should traders buy ADA now?
Like the 1-day timeframe, the 4-hour chart’s swing structure was also bullish. The $0.20 higher timeframe S/R area had confluence with the 78.6% Fibonacci retracement level at $0.19.
The OBV was relatively flat, but the CMF showed strong capital inflows. Sustained demand is necessary to keep the uptrend going.
Investors and swing traders can expect a bullish price reaction in the coming days, targeting the $0.238 local high and the $0.258 extension level. A breakdown below $0.171, unlikely at the time of writing, would mark a bearish structure shift.
Final Summary
- Cardano saw a steep retracement from the $0.258 local highs but has managed to defend its longer-term bullish outlook.
- The altcoin needs to see sustained demand to keep its uptrend going. Defending the $0.20 support zone was a good start.
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