Cardano's native token, ADA, ignored a serious price crash warning to rally to a new best high.

The ADA/USD substitution rate reached $2.56 for the offset time on Friday, post-obit a 154.54% price boom that started on July 20. In doing so, the pair too ignored veteran trader Peter Brandt's 60%–90% toll crash alert, which was based on a archetype bearish design called the caput and shoulders.

Just a flurry of bullish fundamentals assisted Cardano to ignore bearish technical setups.

Capital rotation

At first, ADA/USD'due south upside rally in the early on days appeared largely in the wake of a similar boom beyond the cryptocurrency market place, led by the euphoria surrounding its rival's, Ethereum, major software upgrade and fresh endorsements for Bitcoin from Tesla's Elon Musk and Twitter's Jack Dorsey.

ADA prices also tailed Bitcoin (BTC), which has recently rallied to a higher place $48,000. But the Cardano token started outperforming Bitcoin after Tuesday every bit the latter turned choppy around the The states Federal Reserve's tapering decision, as Cointelegraph covered here.

ADA price trends (black and white) vs. BTC toll trends (ruby and blue). Source: TradingView

In detail, the ADA/USD exchange rate surged 36.81% from its Wednesday low of $1.87 versus BTC/USD's seven.91% rally in the aforementioned menses.

Other pinnacle altcoins also posted better profits than Bitcoin, hinting that traders merely rotated capital out of the flagship crypto'due south marketplace on overvaluation risks.

Altcoins 24-hour adjusted performance against the U.S. dollar and Bitcoin. Source: Messari

Smart contracts FOMO

Traders' bids for ADA also surged due to hype surrounding Cardano'due south "Alonzo" upgrade, which is scheduled for mid-September. The update expects to deploy smart contracts functionality onto the Cardano blockchain, a step that the project's supporters say will make it a directly rival to Ethereum.

Smart contracts would enable Cardano to integrate more than decentralized applications in its ecosystem, peculiarly decentralized finance platforms that enable automated borrowing, lending and trading services.

Technical outlook

Brandt'south surly setup appears less likely to exist realized by traders against Cardano'southward bullish fundamentals.

The ADA/USD daily chart shows the pair in price discovery. Meanwhile, a Fibonacci retracement graph sketched from the swing loftier of $2.51 to the swing low of $1.05 spots ADA testing $2.51 every bit its interim resistance level.

Related: Bullish cup and handle design sets Cardano (ADA) cost up for a new ATH

A close above the said price ceiling puts ADA/USD en route to the next resistance line at 1.618 Fib line near $3.41.

ADA/USD daily chart technical setup. Source: TradingView

Conversely, ADA'due south daily relative strength indicator (RSI), now above 70, has alerted about its interim overvaluation risks. Equally a result, ADA/USD can undergo a sure degree of correction to neutralize its overbought status, with the next support target sitting nearly 0.786 Fib line (at $ii.20).