As the Cardano market calmed down, ADA price began to form a symmetrical triangle. The end of the consolidation phase will lead to sharp swings, but the direction is still unclear.
This article discusses two possible potential outbreaks and specific conditions that must be met for each one. At the time of writing, ADA is valued at $ 2.43 and has a market cap of $ 77.3 billion.
Source: TradingView
After rebounding from $ 2.25, ADA formed a symmetrical triangle on the 4-hour chart. Now there are two options. If the pattern is acting as a continuation of the previous downtrend, the likelihood of a breakdown is high. And when it does, ADA will be back near the $ 2 mark – another 17% drop from current price.
The fall was confirmed when the price closed below the 200 SMA (green) and the September 8th low of $ 2.25.
On the other hand, the symmetrical triangle is more likely to act as a reversal pattern. Once there, a bullish breakout will bring the ADA to around $ 2.95-2.96. A closing price above $ 2.62 and the 50 SMA (yellow) increase this possibility.
However, it is important to note that there is a period of consolidation possible before an outbreak occurs. Volatility is also slowly easing as the major indices moved towards equilibrium.
The 4-hour RSI has refused to break above the midline and slid down as bears prevent the upward momentum from extending. This was confirmed by the development of the Directional Movement Index (DMI). -DI is moving parallel to the + DI line, showing that the downtrend is still active.
On a positive note, the inflows remain stable as the Chaikin Money Flow moves to a higher level. These cash flows can serve as a hedge against a prolonged market decline.
In short, the recent sell-off of crypto has caused turmoil in the ADA market. Although the symmetrical triangle pattern has appeared on the charts, the direction of the breakout is still unclear.
The indicators are trending downward at the time of writing. However, both directions have valid arguments. Therefore, it would be safer to wait for ADA to hit the above levels before going long or short.
You can see the ADA prices here.
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Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.
Annie
According to Ambcrypto
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