It’s a bit quiet in the fiat world so I decided to set my sights on crypto pairs today.
Is it me, or is ADA about to see an upside breakout?
Take a look at this chart and tell me what you think:
ADA/USD Trade Idea
If this is the first time you’ve heard of it, Cardano (ADA) is a layered blockchain project that works a lot like Ethereum (ETH) except it uses Proof-of-Stake algorithm so that it’s not as vulnerable to a 51% attack and is more environment-friendly than Bitcoin and Ethereum are.
Cardano founder Charles Hoskinson was one of the co-founders of the Ethereum network so ADA has a bit more street cred than the other “green coins” out there.After finding support from its May 19 low, ADA/USD has shot up enough to break the trend line resistance that’s been around since last week.
It’s now trading at 1.6200, which was a major support level in the first half of May, and is aligned with this week’s highs and the 200 SMA on the 1-hour time frame.
News of ADA’s platform hitting 1 million wallets should fire up the bulls. In fact, the momentum is probably one of the reasons why ADA continues to see investment inflows despite the recent correction in the crypto scene.
I also noticed that ADA/USD’s conditions are somewhat similar to BTC/USD‘s 1-hour chart:
As you can see, BTC also broke above a trend line resistance and is testing the 200 SMA on the 1-hour time frame. If it manages to reclaim the $40,000 level despite threats of China cracking down on financial institutions offering crypto services, then we could be looking at a rally for altcoins like ADA as well.
A break above 1.6200 – 1.6300 could push ADA/USD to the 1.8200 area of interest. The 1.9500 and 2.1400 zones are also areas to watch in case ADA’s upswing gains momentum.If ADA/USD traders decide to pay more attention to the overbought Stochastic signal, though, or if the breakout above the trend line fails to gain momentum, then ADA/USD could go back to the broken trend line, the 100 SMA near 1.4000, or even May’s lows near 1.1070.
What do you think? Is ADA/USD headed higher? Or will it extend its May downtrend?
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