Key Takeaways:
- Cardano prices are forming a bearish pattern called the bear pennant.
- The ADA token faces more than 70% drop in prices.
- The upcoming hard fork in July might help ADA avoid the bearish pattern.
NEW DELHI (CoinChapter.com) — Cardano (ADA) prices are forming a bearish pattern, called the bear pennant, which might see the altcoin’s prices see a severe correction in late Jul or early Aug.
ADA Might Fall Near $0.1
Pennants are continuation patterns. They form when a period of consolidation with converging trendlines follows a large movement in a cryptocurrency’s prices. Then, the asset breaks out in the same direction as the large initial movement.
Volumes play an important role in verifying the pattern. Per the rules of technical analysis, the consolidation should occur with lower volumes, while higher volumes should accompany breakouts.
ADA volumes need to move up to confirm the pattern. Otherwise, Cardano would continue to consolidate below $0.5. Meanwhile, ADA prices might rebound from support from the pattern’s lower trendline at $0.47 to reach its falling trendline resistance around $0.65 by July.
Also Read: Cardano price risks a 50% price wipeout despite ADA entering a super-buy technical zone.
For a bear pennant pattern, traders calculate the price target by applying the initial flagpole’s height to the point where the price breaks out from the pennant.
In other words, ADA has a theoretical price target of $0.14 nearly if the token confirms the bear pennant. A fall to $0.14 would mean a drop of nearly 70.6% from current price levels.
Vasil Hard Fork To The Rescue?
Cardano has an upcoming upgrade lined up for release in Jul. In detail, the upgrade’s primary goal would be to boost the transaction throughput, volume, and liquidity on the network. Although Cardano intended the upgrade to go live in Jun, unforeseen delays shifted the launch to sometime in Jul.
In addition to speed and scalability, the Vasil hard fork might help make Cardano become more developer-friendly, which would result in more projects on the blockchain. In an ideal scenario, Cardano might attract projects from rival Layer-1 blockchains.
Also Read: Cardano risks another 72.5% price crash as ADA breaks out of ‘bear flag’ pattern.
Network upgrades and hard forks have often influenced a cryptocurrency’s price action. Moreover, ADA has historically reacted positively to network hard forks and upgrades. In addition, Cardano’s prices have fallen drastically after its hard forks, as traders sell to profit from the rallies.
As a result, Cardano might invalidate the bearish technical setup riding on bullish cues from its hard fork.
At the time of writing, ADA was trading at $0.476, down 1.86% on the day.
