Cardano (ADA) Technical Analysis: Bullish Double Bottom Breakout Possible
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Cardano has returned back to its base support this week, after the earlier bull run met strong opposition at the 0.618 fib resistance and was unable to break through. The fall could be attributed to the recent news that Cardano will not be partnering with Google, with IOHK CEO, Charles Hoskinson commenting in his AMA session that the Tech Giant will ‘do their own thing’.
Other Cardano news includes the soon-to-be released testnet of its new virtual machine, IELE, at the end of this month which will execute all smart contracts on the Cardano blockchain. Further updates for this particular project will arrive on the official roadmap page in 21 days time, according to the page’s countdown timer.
The news that the United States Securities and Exchange Commission will be considering Bitcoin ETF’s has also created huge waves this week. This could potentially flood the crypto market with millions of US dollars, benefiting not just Bitcoin but all other altcoins as well.
With this in mind, let’s take a look at the charts to see where ADA is likely to go over the rest of the month.
The Story So Far
Looking at the ADA/BTC chart over 3hr candles we can see that the #8 cryptocurrency by market cap only recently managed to breakout from a 2 month-long falling wedge pattern, after bulls leapt off the uptrending base support towards the 0.618 fib level above.
From there the price action met heavy selling pressure at this resisting fibonacci level and subsequently fell back to the base support as confidence temporarily departed from the bulls.
The Story Now
Right now the asset is shaping up well for a bullish double bottom, after retracing back to the base support for a second time.
Looking at a range of indicators we are starting to see some good buying signals that the asset may be about to begin a new bullish phase.
- MACD shows that momentum has been gradually increasing towards the signal line since May 14th, with buying candles beginning to appear more recently above the signal line as bullish investors start to return to the ADA market.
- RSI showed that ADA was temporarily oversold sometime in the week but has since recovered back into the index channel as the asset starts to make higher highs, than lower lows.
- Chaikin Money Flow indicator is showing a positive uptrend in closing prices comparative to their recent opening prices, with the indicator line beginning to converge over the zero line - highlighting a trend reversal.
There are however, some bearish signals still hanging over the asset that will need to be overcome to further confirm a bullish reversal from the current position.
- The Ichimoku indicator over a closer 1hr candle range shows a bearish T/K crossover still, with a resisting kumo cloud stretching out ahead of the price action. Candles are starting to close in on this cloud and will need to climb through it to indicate that the trend is reversing.
- The EMA lines are still widely separated from each other at this stage. We need to see the 50 EMA to begin converging towards the 200 EMA to tell us that strong bullish support is gathering behind ADA.
Cardano (ADA) Price Targets
All price targets for this asset are set from the 2000 Sats mark, where ADA’s price action, at the time of writing, is holding at.
Bullish Price Targets:
(1) Retracement to the 0.618 fibonacci level at 2,378 Sats (18.90% ROI)
(2) Break above to the 0.5 fibonacci level at 2,592 Sats (29.60% ROI)
Bearish Price Targets:
(1) A break below the base support to the lower 1.0 fibonacci level at 1,683 Sats (-15.85% loss)
(2) If poor market sentiment continues at this stage, the next strong support is way down at the 1,325 Sats mark (-33.75% loss).