Cardano’s native token ADA has seen a significant uptick in price over the past week, sparking optimism among investors and traders. The cryptocurrency has surged by 10% in the last seven days, positioning itself for a potential breakout from its recent trading range.

Breaking Out of the Horizontal Channel

Since August 1, ADA has been confined within a horizontal channel, fluctuating between a support level of $0.31 and resistance at $0.40. This tight trading range has created a coiled spring effect, with recent price action pushing ADA towards the upper boundary of this channel.

Technical indicators are lending credence to the bullish narrative. The Relative Strength Index (RSI) currently stands at 57.25, suggesting growing momentum as market participants increase their ADA accumulation. This reading, being above the midpoint of 50, indicates that buying pressure is outpacing selling pressure.

Bullish Signals from Market Metrics

Further bolstering the optimistic outlook is Cardano’s positive funding rate of 0.008%. This metric, which reflects the cost of holding leveraged positions, suggests that traders are willing to pay a premium to maintain long positions – often a precursor to price rallies.

The Elder-Ray Index’s bull-bear power, currently at 0.02, adds another layer of bullish confirmation. This positive reading indicates that buying pressure is dominating selling activity, reinforcing the narrative of growing demand for ADA.

Key Resistance Levels and Potential Targets

As ADA approaches the critical $0.40 resistance level, market participants are keenly aware of the significance of this potential breakout. A successful breach of this threshold could pave the way for a rally towards $0.47, a price point not seen since June.

On the hourly chart, a key bullish trend line is forming with support at $0.3810. If ADA can maintain stability above the $0.3800 support zone, it could continue its upward trajectory. The next key resistance levels to watch are $0.3900 and $0.4200.

However, traders should remain cautious. If ADA fails to break above the $0.3900 resistance, it could face a pullback. In this scenario, immediate support lies near $0.380, with stronger support at $0.3650.