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Cardano (ADA) was on an upward swing since Friday, with its price gaining over 60% in just five days. What’s the reason behind the current price increase, and should you buy some ADA now?
Fundamental analysis: Smart Contract viability increased Cardano’s positive outlook
The fifth-largest cryptocurrency by market capitalization managed to post such tremendous gains due to its fundamental improvements, mainly its announcement of the Smart Contract launch on the Cardano testnet. On top of that, Cardano’s market position as the most decentralized cryptocurrency, as well as its future prospect in terms of Smart Contract creation and Smart Contract transfers from Ethereum to Cardano network seem incredibly bullish.
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Cardano posted week-over-week gains of 55.80%, outperforming both Bitcoin’s 35.05% gain and Ethereum‘s %18.86 gain. The fifth-largest cryptocurrency by market cap currently boasts a market value of $21.16 billion.
At the time of writing, ADA is trading for $0.685, which represents a price increase of 85.58% when compared to the previous month’s value.
ADA/USD technical analysis: Cardano poised to reach its $1.4 all-time highs?
The fifth-largest cryptocurrency by market cap is still in its uptrend, and if the bulls continue to post higher highs on heavy volume, ADA might reach as high as $1.4. In the meantime, its main resistance is the $0.7265 recent high as well as the area around $0.8.
Cardano’s current move seems very overextended and unhealthy, and many technical analysts are calling for a pullback. However, Cardano’s network upgrades and its long-term perspective might prove them wrong. Ultimately, traders will need to watch for volume rather than the price action, as the only way ADA will stop moving up is if bears reach exhaustion.
ADA’s RSI on the daily time-frame has pushed into the overbought territory, and is currently deep into it. Its current value is sitting at 84.67.
Zooming in to the hourly time-frame, we can see ADA’s volume descent as time passed (though its volume is still incredibly high compared to its pre-surge levels). The cryptocurrency seems to be very careful around the 21-hour EMA, while the 50-hour EMA provides strong support.
ADA’s current uptrend will be put into question if the cryptocurrency breaks the 50-hour EMA. In that case, traders may expect a pullback to the $0.6 area and a retest of the 23.6% Fib retracement level.