Why is Cardano (ADA) price up today?

Cardano (ADA) has exhibited a strong recovery of 26% since dropping to its psychological support at $0.90 on Dec. 10. The swift recovery has led to a bullish position above its 50-day EMA level, which may trigger its next leg higher.

Cardano 4-hour chart. Source: Cointelegraph/TradingView

The ADA/BTC pair breaks higher after EMA200 retest

Strong daily returns against BTC have helped ADA’s performance over the past few days. As illustrated in the chart, ADA/BTC registered a retest of the 200-day EMA level on the 4-hour chart.

ADA/BTC 4-chart. Source: Cointelegraph/TradingView

This indicator is usually tested at higher lows during an uptrend, and an adequate bounce from the EMA indicates a bullish trend continuation during the “altcoin season.”

Altcoin season index. Source: blockchaincenter.net

However, the altcoin season index has briefly declined below 75 after the recent liquidation event. It remains relatively high at 69, which means altcoins like ADA may continue to outperform BTC in the short term until the top crypto asset enters price discovery again above its all-time high at $104,670.

Related: 5 reasons crypto dino coins like XRP, Tron and ADA are going parabolic

Cardano TVL rises by $84 million

DeFi protocols on the Cardano Network have also significantly increased since Dec. 10, improving investor trust. Data from DeFiLlama indicated that ADA’s total locked value (TVL) rose from $560 million to $644 million in 48 hours.

Cardano’s TVL chart. Source: DefiLlama

The rise in TVL was led by Liqwid (lending), Minswap (DEX), and Indigo (lending), each of which registered a 10% increase in locked value over the past seven days.

Cardano’s open interest (OI) has also increased by $140 million over the past day, reaching $830 million on Dec. 10. While the OI has decreased from $1.18 billion on Dec. 3, its current increase coincides with price growth, which infers a continued interest from futures traders.

However, from a technical perspective, Cardano must establish a clearer breakout to reinforce a higher high trend. As illustrated in the chart, despite its 26% rally, ADA faces resistance from a descending resistance trendline.

Cardano 4-hour chart. Source: Cointelegraph/TradingView

A clean breakout above would allow the altcoin to retest its recent high at $1.20, but the oscillator hasn’t signaled a bullish crossover yet. With the relative strength index (RSI) building momentum from an oversold region, the price can be pulled back to the fair value gap (FVG) between $1.03 and $1.05.

Related: Why is Ethereum (ETH) price up today?

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.