Jonathan Morgan
Independent Analyst
- Cardano price maintains support near $0.78 for ten straight days.
- ADA remains near a one-year low despite massive whale accumulation.
- Downside risks to the $0.35 value area remain high, but signs of a bullish reversal continue to develop.
Cardano price continues to display substantial weakness and a lack of participation. Moreover, contrary to major wallet holders tripling their holdings, volume from retail traders is at historical lows, with some exchanges recording all-time low volume.
Cardano buyers continue to accumulate near $0.80
Cardano price remains nearly 75% below its all-time high, with no real evidence of retail traders interested in buying ADA at such a drastic discount. From an Ichimoku perspective, Cardano remains exceptionally bearish.
All of the conditions that short sellers need to generate a massive sell-off for Cardano have been present for several weeks. Still, sellers have been unable to push Cardano to a close below the $0.78 value area.
ADA/USD Daily Ichimoku Kinko Hyo Chart
$0.78 is the critical 61.8% Fibonacci retracement of the all-time high to the low of the strong bar on the monthly chart at $0.33. On its daily chart, it is the final primary support level for Cardano price.
However, Cardano’s Point and Figure chart shows that a powerful bullish pattern may play out if Cardano price can catch a bid.
A hypothetical long setup is now present for Cardano price with a buy stop order at $0.88, a stop loss at $0.80, and a profit target at $1.22. The trade idea represents a 4.25:1 reward for the risk. A trailing stop of two to three boxes would help protect any implied profit made post entry.
ADA/USD $2.00/3-box Reversal Point and Figure Chart
The long trade idea is based on a Point and Figure pattern known as a Bearish Fakeout. Bearish Fakeout patterns often develop as the primary or confirmatory higher low that precedes a broader bullish trend reversal or corrective move.
The hypothetical long idea is invalidated if Cardano price prints a new O at $0.78. Failure to hold the $0.78 price level could generate a flash crash to the next high volume node at $0.35 to $0.40.
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