Analysts caution of downside risk despite Cardano’s 11% rally in May

Cardano (ADA) is showing a commendable 11% increase in its value in May, thanks to a resurgence from key support levels. However, despite the positive momentum, weak indices indicate a potential pullback due to deteriorating derivatives details. The latest ADA price stands at $0.7677, reflecting a minor 0.04% decrease in the last day.

Reviewing ADA’s movement on the 4-hour chart, the token recovered from the 200-period exponential moving average (EMA) at $0.74, pushing towards the short-term resistance around $0.7745. Although it’s trying to retest the $0.84 resistance zone, recent movement seems hesitant, trapping ADA within the $0.72 and $0.77 range. Analysts regard this range as a “no-trade zone” due to the limited directional clarity.

On the positive side, ADA is consolidating above its 200-day EMA, with the moving average structure providing temporary support. A bullish MACD crossover has taken shape, backed by positive histogram bars, indicating that buyers retain some influence over short-term price action. However, the potential bearish crossover between the 50- and 100- day EMAs raises concern. If ADA breaches the 200-day EMA, a “death cross” formation could signal extended declines.

To maintain its upwards trajectory, ADA needs to break through the $0.77 resistance level for another shot at the $0.84 mark. Failure to secure above $0.72 could let ADA test long-standing support near $0.70. Meanwhile, derivatives market data shows a weakening picture. Open interest in ADA futures slumped 0.43% to $920.12 million, indicating reduced trader enthusiasm and suggesting an impending consolidation or short-term correction.

The fate of ADA’s price hinges on its ability to break the current trading range convincingly. While a bullish scenario could push ADA back to $0.84, the current market setting suggests it may remain range-bound or encounter fresh selling pressure. The broader crypto market’s volatility further complicates ADA’s price action, with Bitcoin around $109,000 and major altcoins consolidating post-April highs.

Currently, ADA remains in a technical nexus, with both bullish and bearish scenarios in play. The forthcoming market sessions will be crucial in determining whether ADA can revisit its March peaks, or if it will face a fresh downturn.