Key Takeaways
- Cardano remains stagnant, trading within a tight price range.
- This type of price action points to a potential spike in volatility.
- ADA must print a daily close outside $0.48-$0.41 to resolve its current trend.
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The macroeconomic environment continues to take a toll on the cryptocurrency market as sentiment deteriorates. Although many market participants appear to be waiting on the sidelines, Cardano looks primed for a major price move.
Cardano Continues to Consolidate
Cardano appears to be on the verge of a significant price movement.
ADA has seen its price drop by nearly 17% over the past three weeks. When looking at its daily chart, the downswing came after a rejection from the hypothenuse of a descending triangle formation that started developing in early May. Now, Cardano is edging closer to the pattern’s apex, which anticipates a pronounced spike in volatility.
The height of the triangle’s Y-axis suggests that upon a decisive close above support or below resistance, ADA could stage a 44% price movement. Still, waiting for a clear break of the $0.48 resistance level or the $0.41 support is imperative.
A spike in buying pressure that pushes Cardano above the triangle’s hypothenuse at $0.48 could trigger a bullish breakout. If this were to happen, ADA might gain the strength to surge toward its 200-day moving average at $0.63 or even its May high at $0.69.
However, losing the $0.41 level as support could encourage market participants to exit their long positions, adding downward pressure to Cardano. In this bearish scenario, ADA could resume its downtrend and target $0.33 or $0.25 in case of a sell-off.
Given Cardano’s ambiguous outlook, traders appear to be remaining on the sidelines and waiting for a clear signal before entering any positions. However, global macroeconomic conditions continue to weigh on crypto market sentiment, pushing the Crypto Fear & Greed Index into the “extreme fear” range. It could be difficult for Cardano to break out to the upside if such conditions persist.
Disclosure: At the time of writing, the author of this piece owned BTC and ETH. The information contained in this piece is for educational purposes only and is not investment advice.
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