Technical Analysis and Market Entry: Cardano (ADA) – Bullish Pennant Breakout Eyed

  • IOHK recently announced an updated roadmap for Cardano, which seemed to have encouraged much of the community.
  • ADA/USDT price action is moving within a bullish pennant pattern, subject to a potential breakout higher.

ADA/USDT: Recent Price Behavior

Cardano’s ADA price continues to move within consolidation mode at the time of writing, but appears to be nearing a big breakout. ADA/USDT has been very much narrowing after an extremely high period of volatility from March to May.

A big bull run was observed from the start of March when the price was down at $0.0400. ADA went on to gain as much as 145% up within the $0.1000 territory on April 4. It was the highest price point since September 2018.

ADA/USDT through the whole of April cooled following the decent run higher, resulting in the formation of a bullish flag pattern during the easing. The structure was then broken out of to the upside on May 11, inviting a strong wave of buying pressure.

ADA/USDT daily chart.

Bullish Pennant

Over the last three weeks, ADA has managed to retest the $0.1000 area but faced several rejections. There is a heavy zone of supply that has capped upside pressure. This supply zone runs from $0.0900 up to $0.1000, ADA/USDT has not been above since September 2018.

Despite the repeated failure from the bulls to break out to the north, price action has formed another bullish structure, a pennant pattern. The bulls have the opportunity to capitalize on this movement, as ADA/USDT narrows within the noted formation.

Encouraging Cardano Roadmap

IOHK, the parent company of the Cardano, recently announced a new and updated roadmap for the protocol. The details show progress towards its 2020 vision; additionally, it recaps much of the work thus far on all projects.

The roadmap provides much scope on critical themes as well insight on functional components, how they piece together, and what each development era will deliver. IOHK is keen on transparency, giving the community visibility on what is in being worked on and the underlying offering.

It details that Shelley development should be completed mid-year, which is very much on course, as it is up and running on the mainnet. Furthermore, it is constructed to pull everything together and be updated regularly.

In terms of Bryon, the project had been completed earlier this year, which paves the way for Shelley. Elsewhere, the content will be provided for Goguen, Basho, and Voltaire at a later date. Goguen is touted to be the one to bring mass adoption, and it’s said the era is already very much underway.

Trade Recommendation

Given the current consolidation mode for ADA/USDT, a breakout to the upside does appear to be growing in possibility. The confirmation would come upon a breach from the above-noted pennant structure. A buy position would be favorable upon a daily breakout and closure above the technical formation.

The entry area of interest would be once a break north and retest has occurred with the psychological $0.1000 mark via the daily time frame. The initial target area of interest would be $0.1350, a consolidation area where ADA/USDT last traded in August 2018. If the desired technical set up plays out, stops are to be placed at $0.0880.

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.

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.