Cardano (ADA) is trading within a symmetrical triangle on Friday, and a breakout from this pattern could signal an upcoming rally. The bullish outlook is further supported by rising open interest and activity in previously dormant wallets.
Cardano Price Shows Potential for Upward Momentum
Cardano’s price is currently consolidating within a symmetrical triangle, a pattern formed by connecting multiple highs and lows with two converging trendlines, spanning from late July to mid-September. This pattern typically leans bullish, with the target calculated by measuring the distance between the first swing high and low up to the breakout point. As of Friday, ADA is trading at $0.354, nearing the upper trendline of the triangle.
If Cardano breaks out by closing a daily candlestick above the $0.360 resistance level, adding the 65% projection to the breakout point of $0.360 suggests a potential target of $0.595. However, investors should exercise caution, as the move could slow down after an 18% rally, with a possible retest of Cardano’s daily resistance at $0.424 as traders may take profits.
The Moving Average Convergence Divergence (MACD) indicator on the daily chart supports the bullish outlook. The MACD line (blue) has crossed above the signal line (yellow), generating a buy signal. Rising green histogram bars above the neutral zero line also suggest upward momentum for Cardano’s price.
Additionally, the Relative Strength Index (RSI) is currently at 55, above its neutral level of 50, and trending upward. A cross above 60 would signal strengthening bullish momentum.
Cardano’s on-chain data further reinforces the bullish outlook. Data from Coinglass reveals that futures Open Interest (OI) in Cardano across exchanges is on the rise. OI reflects the total number of outstanding derivative contracts that have yet to be settled, indicating whether money is flowing into or out of the market.
An increase in OI suggests new or additional money entering the market and signals a bullish trend. Conversely, a decrease in OI usually points to market liquidation, with investors exiting and prices potentially falling.
As shown in the graph below, ADA’s OI rose from $185.56 million on Monday to $203.25 million on Friday, marking the highest level in over a month. This increase suggests new money is entering the market, with fresh buying activity taking place.
Additionally, Santiment’s Age Consumed index supports the bullish outlook. Spikes in this index indicate that dormant tokens, which have been held in wallets for a long time, are being moved. These movements can help identify short-term local price tops or bottoms.
For ADA, past spikes in the Age Consumed index have typically been followed by price rallies. The most recent spike, observed on September 18, also signaled that Cardano was poised for an upward trend.
However, if Cardano's daily candlestick breaks below the lower trendline and closes under $0.304, it would create a lower low on the daily time frame, invalidating the bullish thesis. This could result in an additional 9% decline, bringing Cardano back to retest its September 6 low of $0.275.
