Crypto Price Analysis: Cardano and Stellar Preparing for Pumps

While most of the large-cap altcoins like Litecoin (LTC/USD) and EOS (EOS/USD) have posted serious gains, Cardano (ADA/USD) and Stellar (XLM/USD) appear to have fallen behind. Even though both altcoins have recently shown signs of life, it could be argued that the rallies were merely dead-cat bounces. If that’s the case, then both coins have more downside potential. Therefore, it would be better to stick to altcoins that are showing strong bullish signals.

However, coins like Litecoin and EOS have risen so much over the last few months that a significant retracement may be around the corner. When these coins dump, profits will flow back to the market in search for others to pump. Cardano and Stellar are our prime candidates.

In this article, we reveal how Cardano and Stellar and preparing for pumps.

Cardano

A closer look at Cardano shows that it is in the latter stages of its accumulation period. This period started when the market showed signs of selling climax between November 19 to 20, 2018. The volume spikes on those days indicated capitulation.

From that point, Cardano slowly bled with minimal volume until bulls established support of 0.0277 on December 7. Bulls protected this level, which enticed more bottom pickers and bargain hunters. As a result, volume surged from December 17 to 24. This ignited a rally to as high as $0.054529.

Daily chart of ADA/USD

Bears can interpret this rally as a dead-cat bounce. After all, Cardano generated another lower high. From the surface, this looks reasonable. However, further analysis shows that Cardano is flashing bullish signals.

First, bulls are painting higher lows by flipping resistances into support (SR flip). The first SR flip was on January 28, 2019 as Cardano built a new base around $0.036. This fueled a rally to $0.05046009 on February 24. The second SR flip was on February 25 as the market established a new support around $0.04.

These SR flips are enabling bulls to drive the price higher. As a result, Cardano appears to have broken out from an inverse head and shoulders pattern on the daily chart. In technical analysis, the breakout should reverse the market’s trend.


Inverse head and shoulders breakout

Not a lot of people will easily recognize this breakout. The smart money prefers to keep it that way. They’ll be able to quietly accumulate more positions. When they’re ready, they’ll trigger a pump and lure retail traders.

Stellar

Unlike Cardano, Stellar’s bullish signals are obvious. Volume started to pick up on February 6, 2019 as bulls were trying to establish a bottom at $0.0733. Even though sell volume remained high until February 14, Stellar managed to stay above $0.0733. This was a clear signal that an entity was working double time to absorb the selling pressure.

Daily chart of XLM/USD

When an entity, such as a large investor, steps in and invests huge sums to stop the bleeding, it is almost always certain that the price will never revisit the bottom. This is what happened in Stellar.

As sellers lost ammunition on February 15, the market rallied and quickly established a new base at $0.0833 (SR flip). At that point, the entity who bought at $0.0733 was in the green. In addition, the entity is not simply looking for a quick 10% – 20% gain. They are in it to maximize profits. Thus, it seems that they are building another base at $0.1.

This level to level move enables the entity to engineer a massive pump. They will continue to use this formula until Stellar breaches resistance of $0.14. The breakout will likely eventually attract participants who were staying on the sidelines.

Projected XLM move

The seeds for the pump are being sown. With almost the entire crypto market turning bullish, it is only a matter of time before Stellar makes its move.

Bottom Line

Stellar and Cardano may be seen as laggards in comparison to other large cap names. Nevertheless, they are flashing bullish signals in what appears to be preparations for a pump. Once large caps altcoins like Litecoin and EOS dump, profits will flow back into the market. They will likely find their way to prime candidates such as Stellar and Cardano.

 

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.

Kiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and funds, as he does his own crypto research and is a Product Manager at Mitre Media. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.