Saturday, August 13, 2022

Can Cardano’s July hard fork prevent ADA price from plunging 60%?

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Cardano (ADA) has began portray a bearish continuation sample on its longer-timeframe charts, elevating its probability of present process a significant value crash by August.

ADA value in peril of a 60% plunge

Dubbed the “bear pennant,” the pattern forms when the price consolidates inside a range defined by a falling trendline resistance and rising trendline support after a strong move downside. Additionally, the consolidation moves accompany a decrease in trading volumes.

Bear pennants typically resolve after the price breaks below their trendline support and, as a rule, could fall by as much as the height of the previous big downtrend, called a “flagpole,” as illustrated in the chart below. 

ADA/USD three-day price chart featuring “bear pennant'”setup. Source: TradingView

As a result, a decisive breakdown below ADA’s bear pennant structure could mean extended declines to the level at length equal to the flagpole. In other words, the target for Cardano’s price will be $0.20, down over 60% from June 28’s price.

In the meantime, ADA shows signs of consolidating inside the pennant’s range with its imminent bias looking skewed toward bulls. This opens the door for ADA/USD to rebound from the pennant’s rising trendline support near $0.46 to rally toward its falling trendline resistance around $0.60 by July.

Cardano’s Vasil hard fork

Despite the interim bearish outlook, Cardano could get a boost from its upcoming “Vasil” hard fork.

The improve, initially scheduled for June end, will now go stay someday in July and goals to enhance the Cardano community’s velocity and scalability.

Associated: Institutional crypto asset products saw record weekly outflows of $423M

As well as, Vasil is anticipated to make Cardano extra developer-friendly, which proponents argue might even appeal to initiatives from rivaling layer-one blockchains, resulting in a better demand for ADA.

ADA’s value has a history of rising within the days main as much as Cardano arduous forks, which ought to enhance its possibilities at a rally alongside favorable technicals, as proven beneath.

ADA/USD three-day value chart that includes ‘bear pennant’ setup. Supply: TradingView

What’s extra, ADA additionally has a history of plunging hard after its hard forks in a sell-the-news fashion.

Thus, Cardano might be setting as much as resume its downtrend after Vasil goes stay in July, which might fall consistent with the bear pennant mentioned above.

ADA/USD and Nasdaq’s weekly correlation coefficient. Supply: TradingView

On the similar time, Cardano’s value stays nearly in lockstep with U.S. equities amid the Federal Reserve’s interest rate hiking, which ought to proceed to place downward strain on its value within the quick to medium time period.

The views and opinions expressed listed here are solely these of the creator and don’t essentially replicate the views of Cointelegraph.com. Each funding and buying and selling transfer entails threat, it is best to conduct your personal analysis when making a choice.