Cardano is the seventh largest cryptocurrency in terms of market
capitalization. It has made a stellar comeback in the past few days on the back
of its listing on the Huobi exchange and introduction of additional trading pairs on Binance exchange.
Traders also seem to be bullish on the fundamental front as many believe that it can become a
major competitor to Ethereum.
So, what does the future look like?
Weekly chart
The ADA/BTC pair
has a short but volatile history. From the lows of 0.00000254 on November 02 of
last year, it skyrocketed to an intraday high of 0.00009180 on January 04 of
this year. That’s a staggering return of 3514 percent within a span of about
two months.
Thereafter,
from there, it entered into a downtrend, which saw it plunge 81 percent from
the highs to 0.00001673 on March 18.
What
can the investors expect from here on?
For
the past five weeks, the digital currency is in a pullback, which has reached
close to 23.6 percent retracement of the fall from 0.00009180 to 0.00001673.
After
such a sharp decline, a ‘V’ shaped recovery is unlikely because traders who had
purchased at higher levels and were watching their portfolio sink to a huge
loss would bail out once their buy levels are reached.
Similarly,
short-term traders, who have purchased near the lows will also book profits on
rallies.
The
important levels to watch out on the upside are 38.2 percent Fibonacci
retracement level of 0.00004541 and the 50 percent retracement levels of
0.00005427.
The
start of a new uptrend can be confirmed only after the next decline towards the
recent lows. A range bound action for a few weeks is also possible, which will
be a positive sign. Longer the time spent in forming a base, larger will be the
ensuing rally.
Let’s
see how to use the levels above for trading.
Daily
chart
The daily chart shows how the current pullback has stalled right
at the 23.6 percent retracement levels. For the past seven days, Cardano has
been consolidating near the overhead resistance without giving up much ground. This
is a positive sign. We also like the bullish crossover of the moving averages.
We
should see another attempt by the bulls to break out of the overhead resistance
within the next few days. If they succeed, a rally to 0.00004541 will be on the
cards.
If
the break out fails, then most of the traders who have purchased at lower
levels will book out of their positions resulting in a dip.
The
20-day EMA will be the first support. If this breaks, a decline to the 50-day
SMA is also possible.
So,
how should one trade it?
How
to trade the ADA/BTC pair now?
Long-term
traders should accumulate positions on dips towards the 50-day SMA and keep a
stop loss at 0.00001600. If prices sustain below the March 18 lows of
0.00001673, the targets on the downside are 0.00000965 and 0.00000560. The
target of this trade is 0.000054 and higher.
Short-term
traders, who have purchased at lower levels can hold their positions with a
stop loss at 0.00003 levels.
Fresh
positions by short-term traders should be only considered on a breakout and
close (UTC) above 0.000035 levels with a close stop loss. Their first target is
0.000045.
Credit: Cointelegraph
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