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Tuesday, September 28, 2021

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Cardano price is approaching $ 3, but ADA chart fractal hints at possible 40% correction

Cardano’s native blockchain asset ADA hit a new high on Monday, as investors pinned their hopes on an upcoming smart contracts feature that it hopes to drive adoption of the cryptocurrency.

The ADA / USD pair peaked at $ 2,899 around 9:00 UTC, leading to anticipation that it would easily close above $ 3 in the coming sessions.

Many analysts, including chartist pseudonym PostyXBT, they pointed that the Cardano token had entered a “price discovery mode.” Meanwhile, David Gokhshtein hinted that ADA / USD could continue its bull run until September 12, the day that Cardano is going to integrate a smart contracts feature to its blockchain via the “Alonzo” update.

In detail, the Alonzo update introduces a native smart contract development language called Plutus to the Cardano ecosystem. Plutus is now available for testing and brings functional programming to smart contract creation to everyday users.

As a result, ADA bulls anticipate token adoption to skyrocket in upcoming sessions as Cardano attracts decentralized app developers, operating in the emerging sectors of decentralized finance and non-fungible tokens, to its contract ecosystem. smart.

Overbought risks

But Cardano’s technical indicators predict a shock in the short term, something that could cause the ADA / USD pair to correct down to 40% despite maintaining its long-term bullish outlook.

The daily relative strength index (RSI) of the Cardano token has ventured into overbought territory, around 83. Traders consider an RSI reading above 70 to be overvalued. As a result, it leads them to sell the asset to ensure maximum profits.

Daily chart of the ADA / USD pair with the RSI correction fractal. Source: TradingView

For example, a rise in ADA / USD rates in the first quarter of 2021 sent its RSI reading above 90 points. Later, the pair began to consolidate sideways while holding support near its 50-day exponential moving average (50-day EMA; the scarlet wave).

The ADA price is now on top of gains of 114% so far this month and 1.511% so far this year. At the same time, an oversold RSI paints a tentative profit-taking scenario. Therefore, if the Q1 / 2021 fractal repeats, the next ADA support line comes in close to its 50-day EMA at $ 1.73, almost 40% below current prices of $ 2.83.

But a correction won’t necessarily deplete Cardano’s long-term bullish outlook. Given the potential success of its Alonzo upgrade, the project could end up attracting more speculative offers on the upside for its ADA token. As a result, the ADA / USD exchange rate expects to remain in price discovery mode.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Each investment and trade movement involves a risk, you must carry out your own research when making a decision.

Tammy Sewell is our Writer and Social at OICanadian.com. Tammy loves sports, she writes our celebrities news. She spends time browsing through several celebs news sources as well the Instagram. Email: [email protected] Phone: +1 513-209-1700

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