technical analysis

Is Cardano ready for a go at $1? June’s hard fork FOMO lifts ADA price to weekly highs

Cardano’s previous hard forks sparked massive ADA price rallies. Will this time be different?

Cardano (ADA) was among the best performers among the top cryptocurrencies on June 6 as traders assessed a key upgrade that promises to enhance its blockchain’s smart contract capabilities.

Vasil hard fork FOMO

Dubbed “Vasil,” the so-called hard fork event will tentatively take place on June 29, 2022. As a result of the euphoria surrounding this upgrade, traders have started speculating more on ADA’s upside prospects, resulting in its better performance than other top-ranking digital assets.

For instance, ADA’s price rose by over 14% to $0.64 on June 6 compared to the 6% gains of its top rival, Ether (ETH), on the same day.

Cardano’s price history also shows similar euphoric behaviors among traders in the days leading up to hard fork events. For example, the “Alonzo” upgrade in September 2021, which introduced smart contract functionalities to the Cardano network, preceded a 200%-plus ADA price rally, as shown below.

ADA/USD daily price chart. Source: TradingView

Similarly, Cardano’s “Mary” hard fork in March 2021 preceded ADA’s 1,600%-plus price boom.

ADA bull traps

The previous price rallies that led to the hard fork events also occurred amid an expansionary macro-environment. At the time, interest rates were near-zero, and the Federal Reserve was buying $120 billion worth of government bonds every month.

But currently, the U.S. central bank has turned hawkish after witnessing persistently higher inflation. Therefore, many analysts argue that there is now less U.S. dollar liquidity to buy riskier assets, including stocks and cryptos.

Cardano has reeled under the pressure of the Fed’s tightening, with ADA trading almost 80% lower than its September 2021 peak of $3.16. The broader move downside also includes significant bounces, as shown in the chart below.

ADA/USD daily price chart featuring price rebounds in ongoing bear market. Source: TradingView

ADA price to $1?

From the technical perspective, ADA now tests a resistance confluence comprising a falling trendline and its 50-day exponential moving average (50-day EMA; the red wave) near $0.66 and a horizontal trendline (the neckline) near $0.62 that constitutes what appears to be a “double bottom” pattern.

ADA/USD daily price chart featuring ‘double bottom’ setup. Source: TradingView

A break above the resistance confluence could trigger the double bottom breakout.

Related: Crypto funds under management drop to a low not seen since July 2021

As a rule of technical analysis, traders measure the double bottom’s breakout target by adding the distance between the bottom levels and the neckline to the breakout point. That paints a June target of  $0.87, up around 40% from June ‘s price and likely ahead of the Vasil upgrade.

A follow-up rally could also see ADA testing its 200-day exponential moving average (200-day EMA; the blue wave) near $1 for a breakout or pullback. A pullback seems more likely, however, given the prevailing macro risks.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Cardano price fake-out? ADA’s 45% rebound in two days could trap bulls

ADA price has seen sharp recoveries during bear markets in the past with many turning out to be bull traps.

Cardano (ADA) price climbed from $0.48 on May 30 to as high as $0.68 on May 31—a 45% rally in less than 48 hours. But ADA/USD failed to extend its rally further upward and dropped by almost 13.75% from its weekly high.

ADA price: Ear market vibes

Cardano’s price retreated sharply on June 1, giving up a portion of the gains secured in the previous two days. The question now arises whether the ADA/USD pair can extend its recovery trend, especially as it trades almost 80% below its September 2021 peak of $3.16.

Interestingly, the downside retracement began after ADA tested its 50-day exponential moving average (50-day EMA; the red wave in the chart below) as resistance. Also, the pair moved lower in tandem with a broader correction sentiment across riskier assets, including Bitcoin (BTC) and the S&P 500 (SPX).

ADA/USD daily price chart. Source: TradingView

Now, the Cardano token risks a further price correction, according to the Digital Trend, a financial analysis contributor at SeekingAlpha, noting that ADA has seen sharp price rebounds in the past that turned into bull traps, adding:

“In March, we saw ADA go from south of $0.80 to over $1.24 in a couple of weeks. This, to me, looks like another fake-out.”

Several fundamental factors also support a bearish outlook. On June 1, the Federal Reserve will begin unwinding its $9 trillion asset portfolio, likely creating more headwinds for risk-on assets, Cardano included.

“I don’t think we know the impacts of QT [quantitative tightening] just yet, especially since we haven’t done this slimming down of the balance sheet much in history,” Dan Eye, the chief investment officer of Fort Pitt Capital Group, told Market Watch, adding that removing liquidity from the market would “affect multiples in valuations to some degree.”

Cardano price paints bull pennant

From a technical perspective, Cardano could continue its recovery trend in June due to a bullish continuation pattern.

Related: Bitcoin’s recent gains have traders calling a bottom, but various metrics remain bearish

ADA has been consolidating inside what appears to be a “bull pennant,” confirmed by the price fluctuating inside a triangle structure following a massive move upside, called “flagpole.”

As a rule, a bull pennant resolves after the price breaks above its upper trendline and rises by as much as the flagpole’s height.

ADA/USD hourly price chart featuring ‘bull pennant’ setup. Source: TradingView

In other words, a $0.77 bullish target in June, up more than 25% from June 1’s price.

ADA/BTC sees a similar upside setup

ADA has been painting a similar bull pennant setup against Bitcoin, raising the chances of an uptrend for the ADA/BTC pair in June.

ADA/BTC hourly price chart featuring ‘bull pennant’ setup. Source: TradingView.com

As a result, ADA/BTC’s decisive breakout above the pennant’s upper trendline could have it rise toward 0.00002355, up 23% from June 1’s price.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.