A 20% Rally In The Cardano Market Is On The Horizon
The current ADA downtrend price action sets it up for another strong momentum and may head to a new peak price. After a solid rally to over 125% month-to-date and setting up a new peak price of $2.98 earlier in the week, it has lost almost 17% to now trade at $2.48.
ADA Bullish Run Technical Analysis
Hence, analysts suggest that ADA is on a short break before embarking on a strong bullish run. The price action is shadowed within two parallel trendlines, which is proof of the upside analogy. Also, the decreasing volumes, a consequence of the consolidation, show that traders are unwilling to trade the bearish trend.
Hence, the price movement is set up for a bullish run. It is not uncommon for traders to enter the trade when this pattern shows up. They also enter the market when a currency breaks out at the peak of its upper trendline. However, the best point of entry is usually the tip of that upper trend indicating the bull pattern’s start.
ADA 4-hour chart (bull run setup). Source: TradingView
Here, the length of ADA’s trendline is about $0.59. The base of this length coincides with the $2.48 range, while its peak coincides with the $3.06 range. The 50 4-hour EMA (also called the velvet wave) is another indicator that indicates a bullish trend for Cardano’s token.
Analysts suggest that traders use this EMA as temporary support. If it manages to ride that wave, it will prove that ADA/USD would soon break out. Traders have been using this velvet wave as an entry point since the third week of last month.
The lower trendline of the rising channel is further proof of a strong rally, with the peak of this trendline the target to take profits. Hence, ADA could attain its target in the middle of the bullish trend.
ADA’s rising channel pattern. Source: TradingView
Cardano’s Alonzo Update Driving Bullish Trends
Cardano’s much anticipated Alonzo upgrade is the principal fundamental factor that gave rise to the bullishness from the technical indicators. The upgrade which will enable the incorporation of smart contracts on Cardano is scheduled for September 12, 2021.
It is believed that this Cardano upgrade will make it become an actual Ethereum competition. Thus, eliminating several issues trailing Ethereum’s smart contracts functionalities. Hence, it is one main reason for the rise in ADA’s price.
Top executives of Cardano recently revealed through their latest Cardano 360 session that the main goal is to enable smart contract users to switch from Ethereum to Cardano. Another important announcement from that session is that Cardano’s ERC-20 migration tool testnet will be launched in the next few days.
Once that launch takes place, users can move their ERC-20 tokens from Ethereum to Cardano. A top AI network has already agreed to move its governance token to Cardano. Cardano founder further disclosed that Cardano had received requests from almost 120 firms willing to switch to Cardano before the year is over.
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