Cardano has experienced a significant price rebound, with bullish technical indicators suggesting a potential long-term rally.
- ADA surged over 15% in the past week, with technical charts showing bullish reversal signals. Increasing active addresses and rising Open Interest indicate growing interest in ADA.
Cardano [ADA] was experiencing a notable rebound in its price after a long period of correction earlier this year. Since hitting its highest peak this year above $0.77 in January, ADA went through a significant downtrend.
However, in the past week, the asset has surged over 15%, with an extension of this bullish trend in the last 24 hours, currently trading at $0.41, up by 2.6%.
ADA’s potential upside
This rise has caught the attention of the Cardano community with analysts now assessing whether this movement is sustainable or if it’s merely a short-term bounce.
A deeper dive into ADA’s weekly price chart reveals an important bullish signal. A bullish engulfing candlestick pattern, which comes after inverted dragonfly doji, has formed on the chart.
Source: ADA/USDT on TradingView
This pattern is traditionally viewed as a significant reversal indicator, suggesting that a downward correction may be concluding and that a major upward price movement could be underway.
The presence of this pattern indicates the potential for sustained upward momentum for ADA, hinting at the possibility of a longer-term rally.
Backing it up with fundamentals
Although the technical perspective points to a continuation of ADA’s rally.
However, it is essential to cross-check these signals with the underlying fundamentals to determine whether this bullish momentum is backed by solid market factors.
A key indicator to consider is ADA’s retail interest, as measured by the number of active addresses.
According to data from Santiment, a market intelligence platform, ADA’s active addresses have recently increased.
Earlier in the month, the metric hit a high of over 150,000 active addresses, but later fell to 120,000. However, a recovery is now underway, with the number of active addresses exceeding 130,000 at press time.
Source: Santiment
This rise in active addresses suggests renewed retail interest in ADA and indicates a possible increase in trading activity and demand.
An uptick in active addresses often correlates with increased buying pressure and can lead to positive price action for the asset.
If this trend continues, it may bolster ADA’s current upward momentum and support the possibility of a sustained rally.
Another crucial metric contributing to ADA’s potential bullish trend is open interest, which reflects the total number of open contracts in the Futures market.
Data from Coinglass indicates that ADA’s Open Interest has surged by 6.77%, reaching a valuation of $255.04 million.
This increase in Open Interest is mirrored by a rise in Open Interest volume, which has surged by 57.87%, valued at $442.38 million at press time.
Source: Coinglass
An increase in Open Interest alongside rising prices is generally seen as a sign of confidence among traders, suggesting that new money is entering the market.
This scenario aligns with the possibility of continued price growth, as more capital flowing into ADA futures contracts could amplify price movements and extend the current rally.
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