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As the dust settled in the Cardano market, the price started to form a symmetrical triangle. The end of the consolidation period would result in a significant swing, but the direction is unknown.
The article that follows outlines two possible breakouts and the circumstances that must be followed for each outcome. At the time of writing, ADA was worth $2.46 and had a market capitalisation of $78.8 billion.
Cardano 4-hour Chart
ADA formed a symmetrical triangle on its 4-hour chart after recovering from $2.25. There are now two options for the future. A breakdown is expected if the pattern works as a continuation of the prior decline. A unfavourable outcome would return ADA to roughly $2 — a 17 percent decline from its press time level.
To confirm this outcome, sellers would need to finish below the 200-SMA (green) and the swing low of $2.25 from September 8th.
However, there is a probability that the symmetrical triangle will act as a reversal pattern. In this scenario, an upward breakout would place ADA between $2.95 and $2.96. A close above $2.62 and the 50-SMA (yellow) would heighten the probability of this upswing.
However, it’s important to note that a period of consolidation is likely before a breakout is seen. Volatility has been gradually receding too as key indicators inched towards equilibrium levels.
As bears prevented additional upward, the 4-hour RSI was denied a break above its half-line and inched lower. The Directional Movement Index’s trajectory verified this. The -DI line went parallel to the +DI line, indicating that the bearish trend is still active.
On the plus side, capital inflows were healthy as the Chaikin Money Flow gradually increased. These inflows could serve as a safety nett in the event of a prolonged market slump.
The most recent crypto sell-off has caused confusion in the ADA market. While a symmetrical triangular formation did appear on the charts, the path of the breakout remains unknown.
At the time of publication, the indicators were leaning towards a bearish outcome. However, there appeared to be legitimate reasons on both sides. As a result, it would be a safer idea to wait for ADA to reach the aforementioned levels before making a long or short call.