Sheldon McIntyre, CMT
Independent Analyst
- Cardano price closed last week with a Doji candlestick despite broader market weakness.
- Weekly Relative Strength Index (RSI) shows a head-and-shoulders top.
- Key moving average finally caught up to price.
Cardano price catapulted 9000% from the 2020 low to 2021 high, and the momentum carried the price beyond the all-time high set in January 2018. Over the last five weeks, ADA has been shaping a pennant pattern on the weekly chart.
Cardano price could run immediately
A classic pennant is preceded by a straight-up price trend and is short in duration. It is a frequent formation with extremely rapid and relatively reliable outcomes. Following a breakout, prices tend to move immediately, with few pullbacks or throwbacks in either direction.
If ADA shapes a pennant pattern, traders should be prepared for a sharp resolution over the next two weeks. Since the pattern is a continuation pattern, traders should lean their trading preparation toward an upside breakout.
ADA needs to clear the topside trend line at $1.47, and it should be with compelling underlying volume. Upside targets begin to emerge at the 1.618 Fibonacci extension level of the February-March decline at $2.08, followed by the 2.618 extension level at $3.39 and then the 3.618 extension level at $5.50. The big level is the 1.382 extension level of the 2018-2020 bear market at $7.55.
ADA/USD weekly chart
Failures do occur, and traders should turn their sights immediately to the 10-week simple moving average (SMA) at $1.00, a significant psychological level. If that happens, look for the RSI to break the head-and-shoulders top’s neckline, thereby raising the stakes.
This failure could turn ugly below the 10-week SMA as the next support does not materialize until the 0.236 retracement level of the 2020-2021 bull market at $0.53. If the decline continues, and after a few heart palpitations, Cardano price should firm at the 40-week SMA at $0.36, representing a 70% loss from the current price.
Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
Recommended Content
Editors’ Picks
Dogwifhat price pumps 5% ahead of possible Coinbase effect
Dogwifhat (WIF) price recorded an uptick on Thursday, going as far as to outperform its peers in the meme coins space. Second only to Bonk Inu (BONK), WIF token’s show of strength was not just influenced by Bitcoin (BTC) price reclaiming above $63,000.
Runes likely to have massive support after BRC-20 and Ordinals frenzy
PUPS, WZRD, and PEPE are gaining liquidity through Bitcoin Ordinals. Creator of Bitcoin’s Ordinals protocol is debuting a new fungible token standard to rival BRC-20, Runes.
Ethereum shows firm support at key level as its correlation with US indices increase
Ethereum's price continued a sideways movement on Thursday as the market still awaits a trigger. Ethereum isn't alone in this horizontal trend; several major index funds have also traded sideways.
Mango Market attacker convicted of fraud and market manipulation
Mango Market attacker Avi Eisenberg was convicted by a federal jury on Thursday for "fraudulently obtaining" funds from the Solana-based decentralized exchange (DEX). He could face up to 20 years in prison for his role in the $110 million attack.
Bitcoin: BTC’s rangebound movement leaves traders confused
Bitcoin (BTC) price has been hovering around the $70,000 psychological level for a few weeks, resulting in a rangebound movement. This development could lead to a massive liquidation on either side before a directional move is established.