On September 13, the price of Cardano (ADA) fell in line with other major cryptocurrencies despite the successful outcome of its hard fork update “Alonzo,” which introduced the smart contract functionality.
ADA / USD lost 10.67% to hit a local low of $ 2.32, due in part to the sell-off by traders after the price rally of more than 1,200% year to date. Furthermore, the sell-off was accompanied by a general correction of the crypto market, with drops of 4% and 6.97% respectively for Bitcoin (BTC) and Ether (ETH).
Cardano’s contraction began with the introduction of the highly anticipated smart contract functionality on the public blockchain. The launch plans to engage the fast growing sectors of decentralized finance (DeFi) and non-fungible tokens (NFT) struggling with expensive and slow transactions on Ethereum.
As a result, many were expecting a sustained bullish boom in the ADA markets. Value Trend, financial analyst at Seeking Alpha, predicted that Cardano’s native token would reach $ 10, surpassing Ethereum to become the leading smart contract platform.
Overall, this outlook prompted ADA / USD to post substantial gains in the days leading up to the Alonzo update. On July 20, the pair was trading around $ 1, while on September 2 it hit a record high of $ 3.16, plotting a 200% rise.
Bullish continuation signs
Uptrending assets tend to see side consolidations or lower levels following a strong positive move, mainly because some traders decide to take their profits. At the same time, investors with a bullish outlook buy the weak-handed asset to develop long-term investment strategies.
The Cardano chart below suggests a similar consolidation phase after the remarkable bull run of over 200%. Hence, the odds of a continuation of the ADA / USD uptrend remain high.
The pattern on the daily chart appears to be a Bull Flag. Broadly speaking, the profit target for bulls in a Bull Flag scenario is equal to the length of the previous trend.
A breakout above the Bull Flag upper bound ($ 2.93) could see ADA / USD heading towards $ 4.5.
Furthermore, the Cardano token should stay above its 50-day EMA (50-day EMA, purple) near $ 2.27 to keep the bullish bias intact. A correction below the Bull Flag lower bound and the 50-day EMA is likely to push the ADA to $ 1.92, the support formed in mid-August.
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Other analysts shared more bearish targets, and Twitter user Rautakansleri noted a “double top” scenario, adding that traders are selling on the news.
“Cardano’s smart contract update so far proceeds as planned: sell on the news. The price has formed a double top and is now tracking a decreasing bottom. If the $ 2.25 is broken it will drop further. $ 1.20 on the way? “
#Cardano smart contract upgrade so far going as I have predicted: Sell the news.
The price also formed a double top and now forming a lower low. If $ 2.25 is breached then down we go even more.
$ 1.20 soon? pic.twitter.com/riFirqmCgz
– Rautakansleri (@rautakansleri_) September 13, 2021
Cerbul, another market analyst, he has declared that the contraction of ADA is not due to this sentiment, adding that new capital will arrive in the Cardano ecosystem from the DeFi sector.
“Accumulate,” he commented.
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