ADA/USD could retest prices below local support before rebounding to trade in the $3.40 to $4 range
Cardano's price has faced increased pressure since the breakout to its all-time high of $3.09. The downside coincided with a broader crypto market slump led by Bitcoin and Ethereum, with Cardano's ADA slipping to a low of $2.02 on 7 September.
Recovery across the market is seeing ADA's price currently hover near a previous resistance zone (earlier ATH of $2.47). Cardano at this level remains in a strong position for another leg up, with the potential for a new all-time high in the $3.40 to $4 range by early October.
Likely to boost sentiment around Cardano in the short term is the successful launch of the Alonzo upgrade. The hard fork officially brought the era of smart contracts to the blockchain, opening up Cardano to further adoption across the board.
Cardano price outlook
The outlook for Cardano (ADA) is positive given price action for much of 2021. There’s a slight hint of pressure though, with the RSI on the daily chart below 50.
However, should the benchmark cryptocurrency Bitcoin (BTC) break higher after its match above $48,000, new momentum for top altcoins could favour a bullish breakout for ADA/USD.
In this case, buyers are in a prime position to capitalise if they continue to protect the local support (the area marked grey around $2.38 to $2.47).
An upside impulse will allow for a retest of the 20 EMA ($2.55), with a breach of the supply zone at the exponential moving average providing for a breakout above the downtrend line formed since 2 September.
If ADA/USD manages to break above the bearish trendline, buying pressure will most likely propel it past the 1.236 Fib level ($2.82). This should open up a path for bulls to test the barrier around $3 and the current ATH ($3.09), with success bringing into play a new all-time high likely near the 1.618 Fib level ($3.40) and 2 Fib level ($3.98).
ADA/USD daily chart. Source: TradingView
If prices slipped below horizontal support around $2.38, Cardano's bullish outlook would be intact as long as the price stays above the 50 SMA ($2.23). A drop below this level, however, would mean a breakdown to $2 and the 0.618 Fib level ($1.89) would be possible.