The price of Cardano (ADA) rose from $0.48 on May 30 to $0.68 on May 31, a 45% increase in less than 48 hours. But ADA/USD failed to extend its upward rally and fell nearly 13.75% from its weekly high.
ADA Price: Ear Market Vibrations
Cardano’s price retreated sharply on June 1, giving up some of the gains made in the previous two days. The question now arises whether the ADA/USD pair can extend its recovery trend, especially as it is trading nearly 80% below its September 2021 high of $3.16.
Interestingly, the downward retracement began after ADA tested its 50-day exponential moving average (50-day EMA; the red wave in the chart below) as resistance. Additionally, the pair declined alongside broader corrective sentiment across riskier assets, including Bitcoin (BTC) and the S&P 500 (SPX).
Now, the Cardano token is at risk of another price correction, according to Digital Trend, a contributor to SeekingAlpha’s financial analysis, noting that ADA has seen strong price rallies in the past that turned into bull traps, adding:
“In March, we saw the ADA go from south of $0.80 to over $1.24 in a matter 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 portfolio of assets, likely creating more headwinds for risky assets, Cardano included.
Today it starts.
So what does this mean? Is it a direct market? Do we know that everything is fine if nothing bad happens on the first day?
How do you handle this?
— Adam Cochran (adamscochran.eth) (@adamscochran) June 1, 2022
“I don’t think we know the impacts of QT [quantitative tightening] at the moment, especially since we haven’t reduced the balance sheet much in history,” Dan Eye, chief investment officer of Fort Pitt Capital Group, told Market Watch, adding that the removal of liquidity market “would affect multiples in valuations to some extent. »
Cardano price paints a bull pennant
From a technical perspective, Cardano may 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 consolidated inside what appears to be a “bullish pennant”, confirmed by price fluctuating inside a triangle pattern following a massive upward move, referred to as a “flagpole”. .
Typically, a bullish pennant resolves after price crosses its upper trendline and rises by as much as the height of the mast.
In other words, a bullish target of $0.77 in June, up more than 25% from the June 1 price.
ADA/BTC sees a similar pattern on the upside
ADA painted a similar bull pennant pattern against Bitcoin, increasing the chances of an uptrend for the ADA/BTC pair in June.
As a result, ADA/BTC’s decisive break above the pennant’s upper trendline could push it higher towards 0.00002355, up 23% from the June 1 price.
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