Cardano price set for a 10% rally upon a breakout above descending trendline

• Cardano price is testing its descending trendline, a breakout above it signals a potentially bullish move ahead.
• Technical analysis shows that $ADA has formed a bullish divergence on a momentum indicator.
• A daily candlestick close below $0.317 would invalidate the bullish thesis.

Cardano's ($ADA) price is revisiting its descending trendline, and a breakout above it signals a bullish move. $ADA is supported by a bullish divergence observed in both the Relative Strength Index (RSI) and the Awesome Oscillator (AO), suggesting potential momentum for an upward rally.

Cardano price shows potential for a rally

Cardano price is retesting its descending trendline, which is drawn from joining multiple swing high levels from late March to early July.

If $ADA breaks above the descending trendline, it could rise 10% to retest its daily resistance level of $0.426.

Additionally, the formation of a lower low in the daily chart on July 5 contrasts with the Relative Strength Index's (RSI) higher high during the same period. This development is termed a bullish divergence and often leads to the reversal of the trend or a short-term rally.

Moreover, if $ADA closes above $0.426, it could extend the rally by an additional 31% to revisit its 50% price retracement between $0.318 and $0.810 at $0.564.

$ADA/$USDT daily chart" src="https://cnews24.ru/uploads/7c4/7c4a586121b086221501a96f5027bb837a8b65f7.png" size="1814x774">

$ADA/$USDT daily chart

However, if $ADA’s daily candlestick closes below $0.317 and establishes a lower low on the daily timeframe, it may signal a shift in market dynamics that favors bearish sentiment. Such a change could invalidate the bullish outlook, leading to a 10% crash in the Cardano price to the previous low of $0.283 on November 1, 2023.