ADAUSD – Forex Academy

ADA heading downwards

Cardano has had quite a decline, even if we take the downtrend of Cryptocurrencies into consideration. With big resistances coming at $0.079 and $0.083, it will have a hard time outperforming other Cryptocurrencies in their potential upwards move. So how do we trade ADA/USD?

Trading Cardano

To be quite frank, there is only one possible trading scenario. ADA will be underperforming or matching the upward moves of Cryptocurrencies, and outperforming them in the downwards moves (at least in the near future). We advise taking a small size short or staying out of this Cryptocurrency in general. Entry point should be a fail of breaking through the $0.079 resistance line, and there is no set goal to take profits. Stop-loss should be set either at $0.085 (less risk) or between $0.083 and $0.0845. We do NOT advise taking long entries when it comes to Cardano until it comes back over its resistances, and confirms them as clear support lines/areas. Overall Cryptocurrency bearish sentiment further adds to this thesis.

Final word

Long-short portfolios are advised to take a small-sized short position in ADA/USD. However, and other form of trading that includes this pair is too risky to open up. Therefor, being extremely careful is a must in these unstable markets. Short positions are favored in the market, and that’s why this trade is considered.

Cardano (ADA)

Market Cap: $5.34B

Circulating Supply: 25.93B ADA

Max Supply: 45B ADA

Volume (24h) $230.28M

Technical Analysis

ADA/USD rallied in yesterday’s trading session and has invalidated the breakdown below the lower median line (LML) of the major ascending pitchfork. The crypto market has bounced back in yesterday’s session and is signalling that the sellers are too exhausted in the short term. However, the ADA/USD could still come back a little to test and retest the support levels before it climbs towards the next upside targets.

The corrective phase was natural and it was expected after the failure to stabilise above the median line (ML) of the ascending pitchfork. Personally, I would like to see a consolidation on all major cryptocurrencies before they will really start a larger upside movement. We need a confirmation before we’ll go long again.

Technically, the rate is expected to increase after the false breakdown below the LML of the ascending pitchfork and below the first warning line (wl1) of the minor descending pitchfork. It has escaped from the minor Falling Wedge signalling a reversal in the short term.

Another leg higher will be invalidated only by a valid breakdown below the lower median line (LML). It remains to be seen if it will increase from now or after a minor drop and after a retest of the LML, the warning line (wl1).

Conclusion

You can go long on Cardano (ADA) with a first upside target at the 50% Fibonacci line of the ascending pitchfork. The second target will be at the median line (ML) and the Stop Loss could be placed below the 0.170625 previous low or below the 0.166490 static support. This setup could have a Reward-to-Risk around 3.50.