Why could ADA increase by 18%?

• Cardano could recover if it breaks out of the symmetrical triangle technical pattern it is trading in.
• On-chain data paints a bullish picture as latent ADA wallets are on the move and open interest is rising.
• A daily candle close below $0.304 would invalidate the bullish thesis.

Cardano (ADA) price is trading in a symmetrical triangle on Friday, a breakout from which could signal a bullish move ahead. ADA’s increase in open interest further supports the bullish thesis, as do the recent moves seen in previously dormant wallets.

Cardano price shows potential for upward momentum

Cardano price is trading inside a symmetrical triangle, a technical pattern formed by connecting multiple highs and lows with two converging trend lines (from late July to mid-September). This technical pattern has an uptrend and the target is generally obtained by measuring the distance between the first swing high and the first swing low to the breakout point. As of Friday, Cardano is trading at $0.354, nearing the upper trend line of the triangle.

Assuming the breakout occurs by closing a daily candlestick above the daily resistance level at $0.360, adding a 65% measurement to the potential breakout level of $0.360 reveals a target of $0.595. Investors should be wary of this theoretical move as it could face a slowdown after an 18% rally to retest Cardano’s daily resistance level of $0.424 as traders may choose to take profits.

The Moving Average Convergence Divergence (MACD) momentum indicator on the daily chart supports Cardano’s upside. The MACD line (blue line) has crossed above the signal line (yellow line), giving a buy signal. It shows rising green histogram bars above the neutral zero line, suggesting that the price of Cardano may experience an upward push.

Additionally, the Relative Strength Index (RSI) is trading at 55, above its neutral level of 50, and is pointing to the upside. A cross to levels above 60 would indicate that bullish momentum is gaining traction.

ADA/USDT Daily Chart

Cardano’s on-chain data further supports the bullish thesis. Coinglass data shows that Cardano futures open interest (OI) on exchanges is also increasing. OI indicates the total number of outstanding derivative contracts that have not been settled (settled by delivery) and whether the cash flows in the contract are increasing or decreasing.

OI growth represents new or additional money entering the market and new purchases, suggesting an optimistic trend. Conversely, when OI falls, it is usually a sign that the market is liquidating, more investors are leaving and prices may fall.

The chart below shows that ADA’s OI rose from $185.56M on Monday to $203.25M on Friday, the highest level in over a month. This increase indicates that new or additional money is entering the market and new purchases are taking place.

ADA Open Interest chart

Furthermore, the Sentiment Age Consumed index aligns with the optimistic outlook. Spikes in this index suggest that dormant tokens (tokens stored in wallets for a long time) are on the move. These movements can be used to identify short-term local price peaks or troughs.

For ADA, history shows that these peaks have been followed by an increase in prices. The most recent surge seen on September 18 also predicted that Cardano was poised for an uptrend.

Chart of ADA Santiment’s Age Consumed Index

However, if Cardano’s daily candlestick breaks below the lower trendline and closes below $0.304, it would form a lower low on the daily time frame, thereby invalidating the bullish thesis. This could lead to an additional 9% loss for Cardano to retest the September 6 low of $0.275.