Cardano Could Skyrocket Against a Weakening Bitcoin
If you’ve been watching the cryptocurrency markets closely, you would see that a new paradigm is emerging. Bitcoin is losing steam. At the same time, other crypto tokens are bottoming out. One coin that has caught our eye is Cardano.
Cardano is one of the most fundamentally sound cryptocurrencies. That’s why it doesn’t make sense that the cryptocurrency (ADA/BTC) dropped to as low as 0.00000524 on July 16. At that point, the crypto token lost over 94 percent from the all-time high of 0.00008788.
Nevertheless, the cryptocurrency dubbed by some as the “Ethereum Killer” appears to be carving a bottom. It is actually trading at a level where it can create a new base and massively pump.
Cardano Showing Bottoming Out Signals on the Weekly Timeframe
A quick look at the weekly chart shows that Cardano is trading close to historic lows of 0.0000057. Even though bears were able to take out this level on July 16, bulls quickly responded and pushed the price above the support on July 17. The brief breach of the support can now be interpreted as a bear trap.
On top of the bear trap, technical indicators are favoring the bulls. First, we have the weekly RSI flailing oversold conditions for the first time in the history of the market on Binance.
In addition to that, the volume on June 24 was significantly elevated. This can be seen as the capitulation volume. In other words, many dumped their Cardano positions in favor of bitcoin because they’ve lost hope in the market.
If you look at the chart of the psychology of a market cycle, you will see how Cardano has entered a period of depression.
With these signals, we believe that Cardano is at the point of maximum financial opportunity. The cryptocurrency has given up most of the gains of the previous bull market. Thus, it is in a position to start a new cycle.
Sure, it can still go lower but if this is the bottom, then those who buy now will be able to maximize their profits.
Daily Chart Shows Bearish Exhaustion
Cardano has plunged so deep and so fast that bears look overextended. They’re gassed out, and they have very little left in the tank.
A quick analysis of the daily chart shows that bulls are in a great position to take control.
The market has respected support of 0.0000057. In addition, a bullish divergence can be spotted on the daily RSI. This suggests that momentum is shifting to the side of the bulls. Also, the volume has dramatically decreased over the last few days. This indicates that sellers are losing interest in dumping at current levels.
More importantly, Cardano appears to be at the apex of a large falling wedge. A little more push from the bulls and we will likely see the market break out of this three-month slump. We believe that fireworks will commence once the cryptocurrency takes out the diagonal resistance of the falling wedge.
Bottom Line: Consider Buying Close to the Support
Investors who agree with our analysis might want to buy as close to 0.0000057 as possible. If bulls hold the support, the immediate target is 0.00001255. Cardano may still look bearish so consider placing a tight stop below fresh lows of 0.00000524. This way, you stand to gain over 120 percent and risk about 8 percent. That’s a very good risk-to-reward ratio.
Disclaimer: This article is intended for informational purposes only and should not be taken as investment advice.