Network Updates and the FED Deliver Cardano ADA Support

Key Insights:

• Cardano (ADA) finds support to wrap up the day at $0.82 levels, its highest close since March 9
• Crypto market reaction to the overnight FED monetary policy decision drove ADA to a day high of $0.83.
• Technical indicators remain bearish despite Wednesday’s rise.

It was a choppy session for Cardano (ADA) on Wednesday. ADA and the broader market coughed up early gains ahead of the FED’s monetary policy decision and projections. Market reaction to FED policy supported a bullish end to the day.

Reversing a 0.49% loss from Tuesday, ADA rose by 3.62% to end the day at $0.82.

Market Risk Appetite and FED Monetary Policy Deliver Support

Riskier assets found much-needed support on Wednesday. A Hang Seng Index and CSI300 rebound early in the day set the tone. Hopes of Beijing rolling out economic stimulus drove market sentiment, which spilled over the European session.

Apprehension ahead of the FED monetary policy decision and projections tested support late in the day, however.

In line with expectations, the FED lifted rates by 25 basis points. While the FED’s interest rate projections were hawkish, Russia’s invasion of Ukraine and supply chain issues could force the FED to shallow its rate path projection this year.

The NASDAQ 100 rallied in response, ending the day up by 3.77%, which supported the broader crypto market.

For ADA, news of the Cardano development team launching Hydra Heads was price positive.

According to the Cardano announcement,

“Today, almost one year after we read the Hydra whitepaper (for the) first time back-to-back, we opened the first Hydra Heads on the Public Cardano testnet. This should be the first, which saw the full init, commit, close, & fanout lifecycle.”

The Hydra upgrade delivers network enhancements relating to scalability and network security. The full upgrade is due for release later in the year.

ADA Price Action

At the time of writing, ADA was up by 1.39% to $0.8394.

Technical Indicators

ADA will need to avoid the day’s $0.8187 pivot to make a run on the First Major Resistance Level at $0.8428. ADA would need the broader crypto market to support a breakthrough to $0.84.

An extended rally would test the Second Major Resistance Level at $0.8578 and resistance at $0.8750. The Third Major Resistance Level sits at $0.8969.

A fall through the pivot would test the First Major Support Level at $0.8037. Barring an extended sell-off, ADA should avoid a return to sub-$0.80. The Second Major Support Level sits at $0.7796.

Looking at the EMAs and the 4-hourly candlestick chart (below), it is a bearish signal. While ADA holds above the 50-day EMA at $0.8125, ADA remains below the 100-day EMA at $0.8407.

This morning, the 50-day EMA narrowed to the 100-day EMA, delivering support. The 100-day EMA narrowed marginally on the 200-day EMA, also price positive.

Avoiding the 50-day EMA and a move through the 100-day EMA would bring $0.87 levels into play.