Mastering Crypto

08/09 15:40

Can Cardano whales stop ADA price from falling 20%

The amount of ADA being held by Cardano's richest investors has surged to its highest level in almost a year.

The price of Cardano risks falling by over 20% in August as it enters a breakdown stage of a classic technical pattern that could be offset by some promising fundamentals. 

ADA price risks falling to June lows

Dubbed a bump and run reversal (BARR), the pattern develops when excessive speculation drives the price higher quickly, eventually leading to a “bull trap" situation. As it forms, the price trend undergoes three stages — lead-in, bump and run — as shown below.

The lead-in stage sees the price trending upward in an orderly fashion — without any excess speculation. But the bump stage witnesses a sharp advance in price, followed by a complete wipeout of the spike.

In the run stage, the price breaks below the support from the lead-in trendline. Currently, Cardano appears to have entered the run phase of its BARR pattern, as shown below.

If the pattern is confirmed, BARR’s downside target is measured after subtracting the breakdown point at the support line from the pattern’s maximum height. That brings ADA’s price target near $0.22 in August or early September, down 20% from current levels.

Conversely, an ADA rebound can reach the 50-day exponential moving average (EMA) near $0.30 in August, up 5% from the current price.

Furthermore, flipping the wave into support could see a further runup toward the 200-day EMA near $0.34, up around 30% from current price levels.

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