Cardano could be due for a huge reversal from its previous long-term slide as an inverse head and shoulders pattern has formed on its 4-hour time frame. Price has yet to break past the neckline resistance at the 0.0500 level to confirm that an uptrend is underway.
The chart pattern spans 0.0280 to 0.0500 so the resulting uptrend could be of the same height. The 100 SMA is already above the longer-term 200 SMA to indicate that the path of least resistance is to the upside or that the uptrend is more likely to carry on than to reverse.
Price is also trading above both moving averages to indicate bullish pressure and also to have two dynamic support levels keeping losses at bay in the event of dips.
However, RSI is heading south after hitting overbought levels, so price could follow suit as sellers take over. Stochastic is also moving down to confirm that selling pressure is in play. Both oscillators have a lot of ground to cover before hitting oversold levels, which suggests that bears might have the upper hand for a bit longer.
Sentiment in the cryptocurrency industry has been mostly positive, though, and this has been able to keep most coins afloat. Based on TIE.io data, Cardano sentiment is in the positive zone for the daily time frame.
Earlier in the week, Cardano enjoyed a rally of 11% that brought its market cap up to $1.27773B, or 0.92% of the total cryptocurrency market cap in its largest one-day percentage gain since December 28, 2018.
Should this type of sentiment be sustained and possibly fueled by positive developments elsewhere in the cryptocurrency sector, Cardano could be due for a technical break that could usher in longer-term gains. For now, traders might be holding out for such updates before establishing larger positions.