In a recent analysis, cryptocurrency analyst Ali has pointed out the similarity between Cardano’s current consolidation phase and its price trend from late 2020. By examining the price chart, Ali indicates that Cardano (ADA) has been stuck in a consolidation phase for the past couple of years prior to the 2021 bull run. This phase is characterized by the cryptocurrency moving within a parallel channel, which consists of two parallel trendlines dictating the price movement over a period of time.
A parallel channel in technical analysis refers to an area defined by two parallel trendlines within which the price of an asset, in this case, Cardano, moves for a particular duration. The upper trendline of the channel acts as resistance, potentially indicating a local top, while the lower trendline provides support, suggesting a possible bottom. Breakouts beyond these trendlines can indicate the continuation of the trend in that direction. For instance, if Cardano manages to break above the channel, it could be a signal of a bullish trend taking hold.
Examining the price chart, it is evident that Cardano experienced a brief decline below its parallel consolidation channel in March 2020. However, this event was the result of the unprecedented COVID-19 crash, which may be considered an anomalous occurrence and disregarded in the long-term analysis. From mid-2022 onwards, Cardano has been moving within a similar parallel channel, closely resembling its behavior in late 2020.
During the previous consolidation phase, it took until mid-2020 for Cardano to break above the pattern. However, the breakout was not smooth, as the asset retraced back to retest the upper trendline before embarking on a significant rally later in 2020. Drawing similarities from history, Ali suggests that if the pattern repeats itself, Cardano might resume its upward trend around April.
Based on the analysis, if Cardano follows the anticipated pattern, it could experience an upswing towards $0.80, representing a 60% increase from the current spot price. Subsequently, the analyst predicts a brief correction to $0.60 before the cryptocurrency potentially surges to $7. This latter target implies an astonishing rise of 1,300%.
While the analyst’s predictions offer an optimistic outlook for Cardano, it is important to note that market dynamics can be unpredictable. In the past week, Cardano has faced a downfall, with its price declining by 13% to the $0.50 level. Therefore, the future trajectory of Cardano remains uncertain, and investors should conduct their own research and exercise caution when making investment decisions.
Cardano’s current consolidation phase has drawn parallels with its historical price trend. Analyst Ali suggests that if history repeats itself, Cardano could potentially rally to $7. However, it is crucial to approach these predictions with caution, as market conditions can change rapidly. Investors should conduct thorough research and analysis before making any investment decisions, as investing in cryptocurrencies carries inherent risks.
Sources:
– Ali’s analysis on X
– ADAUSD price chart on TradingView
– Image from Michael Föhrsch on Unsplash.com
Disclaimer: The article is provided for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell, or hold any investments. Investing in cryptocurrencies carries risks, and readers are advised to conduct their own research and make informed decisions. The information provided in this article is at the reader’s own risk.