Cardano price primed for ultimate upswing to $3.40 before profit-taking

  • Cardano was in a perfect triangle aiming upwards.
  • Buyers jumped the gun and tried to break the base earlier with regained sentiment in the markets.
  • It will be vital that price action closes above $3.04 on the daily chart.

Cardano (ADA) has been in a bullish triangle since August 20. The ascending green trend line of that triangle got confirmed three times during the life cycle of the triangle, demonstrating the importance of the trend line. Upwards, for the flat baseline, $3.04 got tested once on August 29. Price retreated quickly the day after, however, showing that short-term profit was taken and that sellers have this level marked up as a good entry point for them.

Cardano still has excellent upside potential

The reason for this possible bull trap unfolding comes from two reasons. The first reason is the way buyers gained control. The green ascending trend line from July 20 was chopped up on August 30 and did not look very proper as an entry point. One good element to remember is that SHIB could push above the 55-day Simple Moving Average (SMA). But the risk to the upside is the triple belt of resistance hanging over the current price action.

ADA/USD daily chart

ADA/USD daily chart

A daily close above $3.04 is so important, because this will attract more buyers into the trade. The $3.04 level will then turn into support and act as a jumping point toward $3.40. 

If we do not get a daily close, this could indicate that there has been too much profit-taking and that the trade is weakening. Sellers will try to push price action toward the green ascending trend line of the triangle again. A break lower could push ADA to $2.30. That is the level where the triangle started, and just above there is the monthly pivot at $2.35.

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