Technical Analysis and Market Entry: ADA/USDT Produces Weekly Evening Star Candlestick

Cardano
  • ADA has lost its upside momentum, with last week’s candlestick closing as an evening star.
  • The Cardano network is seeing a large increase in its activity so far this year. 

ADA/USDT: Recent Price Behaviour 

Cardano’s ADA has recently fallen victim to some harsh profit-taking, following such as strong consecutive weekly performance. Before last week’s closure, ADA/USDT had been running to the north for six consecutive weekly, gaining a chunky 125%. The price managed to rally from depressed levels of $0.03000 up to highs at $0.07070. It hit its best heights that were seen since July 2019. 

ADA/USDT weekly chart.

The push north was also the best run observed since Mar – April 2019, proving how long the bulls had been out of the picture. Elsewhere, there is a worrying sign via the weekly view, the candlestick of last week’s close, it produced a bearish evening star formation. It would typically indicate an incoming change in trend. 

ADA/USDT daily chart.

The price from February handed back control to the bears, as ADA/USDT has been more or less falling since. A loss of some 18% has been recorded with the bears picking up downside momentum. The recently caught some daily support at around $0.05700, the 38.2% Fibonacci is tracking. It is measured from the swing low on Dec 18 to the swing high Feb 13. The noted support has only temporarily propped up the price and still remains vulnerable to potential downside risks.  

Activity Increase On Cardano Network

The Cardano (ADA) network has seen its network activity steadily rising in 2020. It can be observed in the metrics such as; the number of daily active addresses, the total number of addresses, and the number of transactions all going up. Data provided by IntoTheBlock, demonstrates that the network reached its all-time high with almost 10,000 active addresses on Feb 12, which is a 319% increase since Jan 1, 2020.

There has also been a reported rise in the active address ratio on the Cardano network. It jumped 231% from the beginning of the year. The network’s Jan 1 active address ratio was 0.58%. On Feb 17, the network saw an active address ratio of 1.93%. That means that 1.93% of the addresses on the network have made at least one transaction on Feb 17.  

Additionally, the overall number of transactions on the network has also been on the rise. There was a reported average of 3,610 transactions daily in the past week. The network’s 4,230 transactions recorded earlier this month represent a massive increase from the beginning of the year when the network dipped with around 1000 transactions.

Trade Recommendation 

ADA/USDT 4-hour chart.

Given the loss in momentum from the bulls, the downside is eyed in the near-term prior to any further committed buying being observed. An entry around the current market price is eyed, with targets at; $0.050650 (50% Fibonacci), $0.045500 (61.8% Fibonacci). Stops to be placed at $0.067500. 

Disclaimer: The author 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.

Author:
Ken has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.