Key Cardano Takeaways
- Cardano (ADA/USD) has formed a falling wedge pattern on its four-hour chart, suggesting a potential breakout of up to 21 percent.
- The blockchain token broke above the bullish structure on Tuesday but required upside confirmation.
- Any form of consolidation would risk invalidating the bullish outlook.
A falling wedge breakout is brewing on the Cardano four-hour chart.
In retrospect, Falling Wedges are bullish reversal patterns that begin wide at the top but start contracting as the price moves lower, forming a sequence of reaction highs and reaction lows until they converge. The structure realizes an upside bias after the price breaks out above its resistance trendline, accompanied by higher volumes.
Breakout Ahead?
Cardano’s ADA showed signs of breaking out of its Falling Wedge pattern on Tuesday. The token popped upward by more than 5 percent, hitting an intraday high of $1.17 before slipping lower during the US session. The accompanying volume spiked, hinting that bulls want to pursue an extended upside move following a technical confirmation.
It is $1.50-resistance. The level served as support during the ADA’s downside attempts between March 16 until its flipping on March 22. On Tuesday, it capped the ADA/USD’s upside efforts from turning into a full-fledged breakout. Traders need to break the $1.50-resistance to confirm a short-term upside bias, further led by the Rising Wedge breakout move.
Should it happen, the breakout expects to last until it rises by Wedge’s maximum length. The gap between the pattern’s upper and lower trendline is 21 percent long. Therefore, the Cardano token could surge by as much as 21 percent, which would take its prices towards $1.38.
Bitcoin Influence
Traders should also watch for overall cryptocurrency market trends. Bitcoin continues to be the locomotive, telling other rivals about which direction to take next. The benchmark cryptocurrency recovered alongside the Cardano token today, again showing its credibility as the engine behind crypto trends. If it corrects lower, it would mean a similar call for Cardano and other altcoins.
Loose central banks’ monetary policies and higher government spendings continue to scare investors about inflation. Bitcoin, which poses itself as a hedge against devaluating fiat currencies and rising consumer prices, could therefore resume its uptrend. Cardano would likewise follow suit.
Meanwhile, any potential signs from the US central bank regarding rate hikes could lift appeal off Bitcoin. Its downside correction could put other tokens at risk of correcting, as well.
Fundamentally, Cardano appears stronger as the market anticipates it would attract Ethereum’s clientele to its smart contract-enabled blockchain platform. The project’s founder Charles Hoskinson said earlier this week that their public ledge is overwhelmed with demand, even without launching a single smart contract. He expects at least 100 Ethereum-based decentralized applications to migrate to Cardano in the near future.
| Image by NASA-Imagery from Pixabay |
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