Cardano (ADA) has spent most of this year consolidating within a flag formation, keeping its broader price structure compressed across the period.
A few weeks ago on 22nd August, an attempt was made by the bulls to break out of the formation. However, it was not successful. Instead, the altcoin’s price returned to the trading range.
However, the buying activity has been more intense this time. Since its recent rebound from the 100-day EMA at around $0.19 five days ago, ADA bulls have been pushing with intent. In fact, for most of the last 24 hours, ADA recorded gains of over 10%. This, before the altcoin retraced on the charts again.
In any case, the latest move brings the flag into focus again. A breakout above its upper bound will set the path towards the next resistance at $0.29.
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Funding rates point to growing buyer interest
At the same time, there have also been some signs of greater demand on the derivatives market. According to Santiment, ADA has recorded six consecutive days of positive funding rates. This implied that those with long positions may be paying the shorts to hold onto them.
The positive funding rate could facilitate ADA’s price action more if it is accompanied by greater demand for the spot. Nevertheless, very crowded long positions can increase the risk of liquidations should another breakout fail.
Volume surges as ADA approaches the breakout
That’s not all though as Cardano’s trading activity also accelerated alongside the latest price move. In fact, the network’s 24-hour volume rose exponentially above $747 million.
This hike matters because a breakout supported by heavier volume would carry more weight than the failed attempt seen on 22nd August.
Concurrently, ADA’s Fully Diluted Valuation also climbed to around $9.95 billion, extending a week of consistent gains. The surge in FDV often alludes to rising valuation alongside stronger trading activity.
Similar alignments in the past have resulted in aggressive price moves. The same turn of events could be seen on ADA’s price charts in the near future.
Can ADA finally break above the flag?
As it stands, the main focus will be on the resistance point of the flag pattern. In case the buyers manage to break above this resistance and continue trading above it, then the $0.29 target may come up.
In the event of a failure, however, it will confine ADA within its consolidation zone and may result in range-bound movement again. However, it is worth noting that there is a liquidity cluster worth $24 million at this resistance level.
Final Summary
- Cardano’s buyers recently renewed their attempt to break out of a long-running flag pattern.
- Four consecutive days of positive funding and volumes above $747 million could strengthen the case for a move to $0.29.
