Cardano (ADA) is facing a critical test after a strong multi-week rally, with analysts split on whether the token can extend gains or is poised for a deeper pullback.
On-chain analyst Ali Martinez suggested earlier this week that Cardano could be breaking out of a triangular consolidation pattern, “eyeing $1.10” as the next upside target. At the time, ADA was hovering just below the psychological $1 level at $0.97, its highest since March.
However, as volatility returned to the broader crypto market, ADA slipped back to $0.91, prompting Martinez to issue a more cautious update on August 18. Highlighting a “buy signal on Cardano ADA hourly from TD Sequential,” the analyst argued that the token “could be ready to bounce.”
At the time of publication, ADA was changing hands at $0.89, down 7.39% in the past 24 hours, underperforming the broader market decline of 3.54%. Still, the token remains up 13.36% on the week, with its market capitalization climbing from $28.59 billion to $31.98 billion, adding over $3 billion in value and securing its position as the 10th-largest cryptocurrency by market worth.
The pullback follows a rapid run-up, with ADA surging 52% over the past 60 days and notching a five-month high of $0.98 last week. Momentum indicators reflected overheating conditions, with the 14-day RSI at 70.55 signaling overbought levels. That triggered widespread profit-taking, compounded by Bitcoin’s 2.6% drop that sparked over $300 million in liquidations across altcoins.
The 24-hour trading volume eased slightly, down 0.52% to $2.08 billion, signaling waning buy-side pressure. On-chain data also shows that an estimated 94% of ADA holders remain in profit, a setup that often coincides with short-term corrections as traders secure gains.
For bulls, the immediate line in the sand sits between $0.89 and $0.90, aligned with the 38.2% Fibonacci retracement level. A sustained break below this support could expose ADA to further downside, potentially retesting the $0.85 region.
Conversely, holding the line could set the stage for another move higher, with $1.10 still within scope if Martinez’s breakout thesis plays out.
