By Shelly Melancon (Switzerland)
After crashing by nearly 30% twelve days ago, ADA price is on the road to recovery. A hidden bullish divergence from the Cardano weekly price time frame indicates that the bullish momentum is close.
Cardano’s Hydra Is About To Be Launched
Besides the chart pattern, another factor responsible for the possible ADA bullishness is the launch of Cardano’s scaling solution (the Hydra). Hydra developers launched its latest pre-launch (the node integration) earlier in the week. As an update towards the Hydra release, Cardano developers increased their Github commits by more than 3,000.
Launching the Hydra scaling solution will simultaneously enable smart contracts and transaction processing on the Cardano blockchain. Executing this scaling solution will also be beneficial for the Cardano community, the same way the ethereum community has been benefiting from creating parallel blockchains.
Updating The Cardano Wallet Is Important
Cardano developers are also improving its wallet to make it compatible with the node’s latest version (v.1.32.1). The “Coinskid” YouTube channel (a popular crypto trade analysis channel on YouTube) was the first to observe the hidden bullish divergence on ADA weekly timeframe. It also noted a declining wedge pattern, which characteristically signals the beginning of a new bullish run.
Once this bullish run starts, it could extend over the $1.35 resistance price range and even attempt to reach the $1.48 resistance price range, representing a 10% rise from the current price. Many analysts agree that ADA price is close to its market bottom (the level which kickstarts a new bullish run) following its 65% crash recently.
ADA Price Action
Even though ADA price is still trading lower, it presents profit potential on either side of the market. A massive rally would likely begin once the temporary price collapse is over. This temporary price collapse would occur when ADA breaks below its current support range. There is a possible long-term entry position on ADA’s weekly chart. This entry can be found at $1.34, a profit target of $3.00, and a stop loss of $1.21. However, this entry won’t be valid unless ADA closes a little over the $1.34 price point.
ADA/USD weekly chart. Source: TradingView
If this entry-level comes into play, it would be a crucial sign of bullishness because it would mean that the ADA price would sit close to the price corresponding to the 0.382 Fib. Retracement level. The RSI and the composite index (CI) are two critical factors that can make this long entry possible.
Currently, the RSI value at 30 is close to the first oversold region, while the CI is at a historical low. Conversely, ADA entry price on the bear market can be found at $1.18, a profit target of $1.00, and a stop loss of $1.26. Traders should only enter when the daily price closes a little below the $1.18 price region. The CI’s head and shoulder structure represent the determinants for this bear entry. As of this writing, ADA currently trades at $1.29.
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