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- There is a pennant pattern that indicated two possible outcomes –
- Bullish and Bearish outcome possible
- ADA is exhibiting positive signals
This week Altcoins had a mixed bag of fortunes. While some Altcoins were quite volatile, buoyed by the surge of Bitcoin above $42,000 followed by its tanking, the same cannot be said about Cardano.
Market vagaries did not seem to affect ADA prices which remained steady between the strong resistance of $1.38-$1.40 and support at $1.25.However, an analysis of its movement since May 19 highlighted the formation of a peculiar figure. A potential swing could be in store over the coming week. The question is – In which direction?
Looking at the charts since the mayhem of May 19, Cardano has formed four higher lows at $1.95, $1.86, $1.49, and $1.38. Two trend lines can be plotted on these points. An upper sloping trendline was used to plot these points on the charts, and a lower trendline was planned along with the slightly higher lows of $0.95, $1.0, and $1.02.Thus, a pennant pattern indicated two possible outcomes as we advance- A possible bullish effect or a possible bearish result.
Bullish Outcome
The bullish outcome is achievable, but Buyers would need to hike above the $1.38-$1.40 resistance with a simple rider. It would trigger a 40% surge in value towards the highest point in ADA’s pattern at $1.88. However, it is not as plain and straightforward as it seems. For this to happen would require ADA to close above its weekly 20-SMA, which has been running bearish since July 5. Moreover, the Visible Range noted many sellers at ADA’s resistance mentioned above the zone.
Bearish Outcome
This scenario can happen. ADA would need to drop below its daily 200-SMA (green) and Visible Range’s POC at $1.21. Ideally, ADA would find support at the higher low at $1.05, but a close below this level might lead to a sharp sell-off in the market. The April 23 swing low of $0.92 would be in focus in such a situation.
Winner-Bullish or Bearish sentiments
When this story went to print, the buyers were ruling the roost. The RSI was above 60, which is a clear sign of bullish sentiments in the market. The Squeeze Momentum Indicator indicated a surge in pressure, while the MACD was steady in its northbound trajectory, though with some jerky movement. However, the indicators had not yet matured to levels to indicate a clear winner in this battle.
Conclusion
ADA is exhibiting positive signals and is trading last close to the resistance zone of $1.38-$1.40. Traders should be on the lookout for a break above or below critical levels to ascertain ADA’s next destination over the coming weeks.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
