The formation of a pennant pattern hints the ADA price is poised for further decline; sell now?
Published 6 seconds ago
In response to the consolidation phase in the market leaders Bitcoin and Ethereum, several cryptocurrencies have witnessed increased volatility since last week. As a result, the Cardano coin shows candles with long-wicks rejection on either side reflecting the uncertain behavior. However, a noteworthy pattern has emerged on the daily chart, characterized by a downward movement transitioning into a sideways trajectory. This particular price action formation resembles a bearish pennant pattern.
Cardano Daily Chart: Key Points
- The ADA price resonating within a triangle structure can be considered a no-trading zone.
- A bullish breakout from the upper trendline of the pennant pattern could surge the altcoin price by 16%
- The intraday trading volume in the ADA coin is $234 Million, indicating a 22.3% gain
Over the past eight days, the ADA price trading sides have been confined within two converging trendlines, which mirrors the prevailing market sentiment of uncertainty. A closer examination of the 4-hour chart reveals the emergence of a triangular shape, indicating the development of a pennant pattern.
Pennant patterns are often observed within downtrends and serve as brief interludes that allow for a temporary pause in the prevailing bearish momentum, thereby extending the preceding trend. As of the current observation, the Cardano coin is exchanging hands at $0.267, reflecting an intraday loss of 1.8%.
With a recent reversal from the pattern’s upper trendline, the price action is poised to challenge the lower support. In addition, a higher probability scenario involves Cardano’s price breaking below the lower trendline, an action that could potentially amplify the selling pressure.
Such a breakdown could trigger a subsequent decline of approximately 15%, pushing the price downward to revisit the low point recorded in June, at $0.22.
Can Cardano Coin Reclaim $0.3 Mark?
If the ADA price gives a bullish breakout from the triangle shape or rebounds from $0.22 support, the upward trajectory could still be limited to $0.3 as the buyers may face a downsloping resistance trendline around it. The daily chart shows two such resistance trendlines, which are offering strong resistance during bullish bounces. For potential investors to get a better confirmation for trend reversal, the coin price must break above these barriers.
- Average Directional Index: The rising ADX slope reflects the seller’s strength to prolong the correction trend
- Bollinger Band: The downsloping lower band of the Bollinger band indicator reflects the underlying selling momentum is still aggressive.
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.