Cardano (ADA) has been experiencing a consolidation phase that has caught the attention of analyst Ali. Drawing parallels with the cryptocurrency’s trend from late 2020, Ali suggests that history may repeat itself, leading to a potential price rally to $7. Analyzing the chart provided by Ali, it is evident that ADA had been stuck within a phase of consolidation for a few years leading up to the 2021 bull run. During this time, ADA’s price movement was confined within a parallel channel.
In technical analysis, a parallel channel refers to an area formed by two parallel trendlines that enclose the price movement of a commodity for a certain period. The upper trendline typically acts as a resistance level, providing a potential local top, while the lower trendline functions as support, helping the asset bottom out. Breakouts beyond these trendlines can indicate a continuation of the trend in that direction.
The channel observed in Cardano’s price movement during the relevant periods was parallel to the x-axis, indicating a completely flat behavior. It is essential to note that ADA briefly dipped below its consolidation channel during the March 2020 COVID-19 crash, which can be considered an anomalous event and ignored in the long-term analysis.
Since mid-2022, Cardano has entered a consolidation phase mirroring its late 2020 behavior. During the previous consolidation phase, ADA took until mid-2020 to break above the pattern. However, the breakout was not a clean one, as the asset retraced back to retest the upper trendline before embarking on a significant upward run in late 2020.
Drawing a parallel between the two consolidation phases, analyst Ali predicts that if history repeats itself, ADA may resume its upward trend around April. According to Ali, this pattern continuation could potentially result in an upswing towards $0.80, followed by a brief correction to $0.60, and eventually reaching the $7 mark.
If ADA were to rally to $0.80, it would signify a 60% increase from the current spot price. A further surge towards the projected $7 target would imply a substantial rise of 1,300%. However, it remains uncertain whether Cardano will indeed follow this projected trajectory or deviate from it.
In the past week, Cardano has encountered some bearish pressure, resulting in a 13% decline towards the $0.50 level. This recent downward trend has raised concerns among investors and traders, highlighting the inherent risks associated with investing in cryptocurrencies.
Cardano’s current consolidation phase reflects its previous behavior from late 2020, leading analyst Ali to predict a potential price rally to $7. The parallel channel observed in the price movement signifies the importance of resistance and support levels. If history repeats itself, ADA could experience an upward trend in the coming months, reaching $0.80 and eventually surging towards $7. However, it is crucial to exercise caution and conduct thorough research before making any investment decisions. Investing in cryptocurrencies carries inherent risks that should be carefully assessed.
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