Crypto Price Analysis: Bitcoin Showing Striking Similarities With Bullish Cardano
Bitcoin (BTC/USD) has been trading within a tight range between $3,750 and $4,170 for over a month on Bitfinex. The narrow trading range is confusing market participants, especially retail traders. Without any clear indication whether the market is bearish or bullish, the fear of falling victim to another crypto carnage is keeping many on the sidelines.
Under this condition, many are missing the chance to accumulate Bitcoin at steeply discounted prices. That’s a shame because we’ve been bullish on the market ever since we called the bear market bottom on December 7, 2018. Now, we have another strong reason that supports our bullish bias.
Bitcoin is printing an identical market structure to that of Cardano’s (ADA/USD). As we all know, Cardano has become bullish over the last few weeks after it broke out of range accumulation. We believe it’s only a matter of time before Bitcoin does the exact same thing. In this article, we show how Bitcoin is bullish by revealing its similarities with Cardano.
Two Failed Range Breakout Attempts
It took Cardano two failed breakout attempts and four months of accumulation before it could get out of range accumulation. The first failure was an attempted breakout from an inverse head and shoulders pattern. While Cardano managed to go above range resistance of $0.05 on January 8, 2019, bottom pickers took advantage of the rally to heavily dump positions. As a result, the market retreated to range accumulation.
The second failure was a rally ignited by a falling wedge breakout. Cardano used the pattern breakout as a catalyst to take out range resistance of $0.05. Unfortunately, the market succumbed to overbought readings. That forced the Cardano to pull back once again.
ADA two failed range breakout attempts
Interestingly, Bitcoin is printing the exact same pattern. It has been in range accumulation for over four months. So far, it had two failed range breakout attempts. Just like Cardano, Bitcoin failed to break out of range accumulation twice after printing an inverse head and shoulders pattern, as well as a falling wedge.
BTC two failed range breakout attempts
The similarities are undeniable. It becomes even more remarkable once you take into account the number of times Cardano touched the range resistance before finally taking it out.
Five Taps on Accumulation Resistance
In technical analysis, the strength of a support or resistance is drained every time the price touches it. A good example is the $6,000 support of Bitcoin. In 2018, bears touched the resistance four times before it finally gave out. The numerous touches eventually depleted demand.
BTC 6k support weakening after each tap
The same concept can be seen in Cardano. The market tapped resistance of $0.05 five times over the course of four months. Each touch weakened the strength of the bears until the resistance finally gave out on March 16.
ADA range breakout after five taps
We’re seeing the same pattern unfold in Bitcoin. So far, Bitcoin tapped resistance of $4,250 four times. We believe the next attempt will finally take the market out of range accumulation and into bull territory.
Bitcoin looking ready to breakout on the fifth tap
While it is also possible that Bitcoin may get rejected again, the long-term reversal pattern it is printing makes us think otherwise.
Ascending Triangle Breakout
With all the fakeouts in the last four months, it eventually became apparent that Cardano was painting a large ascending triangle on the daily chart. Notice how bulls generated a higher low every time they got rejected by the $0.05 resistance. They slowly built the stairs that enabled them to effectively take out the roof.
We are seeing the exact same pattern in Bitcoin. The market is also creating a large ascending triangle on the daily chart to breach resistance of $4,250.
BTC ascending triangle
Just like in Cardano, Bitcoin bulls are building the stairs to help them finally blast through the roof.
The striking similarities between Bitcoin and Cardano make us think that Bitcoin will eventually take out its range resistance of $4,250. After all, price action captures the psychology of crowd behavior. Thus if patterns are the same between two markets, the end result will likely be the same as well.
Disclaimer: The writer owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
Featured image courtesy of Shutterstock.