Bitcoin (BTC/USD) has gained roughly 20% in price over the last 30 days and is still on the rise. Cardano (ADA/USD), on the other hand, is trailing Bitcoin by around 10% over the same 30-day period.
Let’s take a closer look at Cardano’s monthly chart to see if there are any signs that the cryptocurrency can rally and begin to close the underperformance gap.
What the Cardano chart reveals
After three months of consolidation, ADA formed a symmetrical triangle and broke out. However, volumes following the breakout on Thursday are still very low, and the breakout does not appear to be very strong.As of Friday, Cardano was heading for a re-test of the trendline, and if it can stay above it, the next few months look very promising for the coin.The structure was also broken, with the lower highs being engulfed by the higher with the breakout candle of Thursday, but ADA gave a weak closing, indicating that the breakout is not too strong.$1.951 is a critical demand zone for ADA because there are no demand zones below this level.To avoid being caught in a fake breakout, a successful re-test at the $2.163 level must be seen before entering long in ADA.If the re-test fails, a short entry can be taken because a false breakout can yield some excellent targets.If the re-test is successful, we can anticipate a target of $2.959 as the first take profit level and a new all-time high as the second.A long-term target of $4.35, which is the 1.618 point for the Fibonacci Levels, can be set, as the 1.618 level could become a strong level of resistance for ADA.
Should you purchase ADA this week?
ADA has repeatedly tested the $2.261 level on Thursday and Friday, and it appears that it will fall below that level, supporting the initial view of a re-test of the trend line. When the $2.60 level is broken, a short entry can be taken, but proceed with caution because the 200-day moving average is just below the support.If a short position is taken, a target of $2.163 can be set.
A long entry should not be taken until there is a clear re-test of the trend line with an increase in volumes; once a successful retest is seen, broader momentum within the cryptocurrency market may help push Cardano to a new all-time high.