Cardano looks good for a quick burst to $1.20-$1.26 this week after trading within a symmetrical triangle setup for nearly 10 days. However, bear in mind that the following downtrend would turn extremely brutal if ADA fails to hold losses above $0.92.
At the time of writing, ADA traded at $1.02, down by 3.6% amidst a weaker broader market.
Cardano Daily Chart
Cardano’s symmetrical triangle took shape after the price strung together a series of lower highs and higher lows between 21-31 January. Now within the final consolidation stage, ADA eyed an upwards breakout after trading close to a demand area between $1.00 and $0.92. The resulting breakout could quickly catch legs to $1.40 and test a resistance trendline if ADA progresses above its daily 50-SMA (yellow) on good buy volumes.
However, the following round of profit-taking would trigger a massive correction back to ADA’s demand zone. The situation could turn severe if ADA weakens below the last bastion of defense at $0.80 during any given point. A glance at ADA’s February bull run showed the lack of reliable support areas between $0.80-$0.44.
Indicators
The daily RSI was close to setting up a double bottom at 35. A rebound from this bullish pattern would push the momentum oscillator back between 55-65. The optimistic outlook was further reinforced by a potential buy signal on the MACD.
In either case, ADA’s indicators were unlikely to hold beyond their respective mid-lines since a larger downtrend was in effect.
Conclusion
ADA looked forward to a mini-rally this week. The candles could even extend to $1.40 if bulls overcome the daily 50-SMA (yellow) convincingly. However, caution must be maintained once these targets are met. The next leg downwards carried a much larger threat, especially if ADA weakened below $0.92.