Cardano (ADA/USD) is a market that looks ready to flex its muscles. The market appears to have established a bear market low of $0.025601 on December 7, 2018. At that point, Cardano was showing signs of reversal. The daily candle on that day had a long wick below its body to show the presence of buyers. Also, the daily RSI was flashing a bullish divergence as the market traded in oversold territory.
Under these conditions, Cardano generated a strong rally. It climbed as high as $0.074 on January 8, 2019. Although the market has been pulling back since, this gives us a chance to buy the dip.
Technical analysis shows that ADA/USD is creating a bullish higher low setup of $0.042. This price area used to be Cardano’s immediate resistance as the market struggled to breach this level from January 27 to February 17, 2019. On February 18, the market took out this resistance with heavy volume. We believe that Cardano’s next move is to flip this resistance into support.
In addition, the rally on February 18 coincided with a golden cross on the daily chart. On that day, the 50-day moving average crossed above the 100-day moving average. This is a signal that the market is turning bullish.
The strategy is to buy as close to $0.042 as possible. If bulls can stay above this level, they will likely generate a rally to our targets of $0.0535 and $0.067.
The process may take less than a month.
Daily Chart of Cardano/US Dollar on Kraken
As of this writing, the Cardano/US Dollar pair is trading at $0.45049 on Kraken.
Summary of Strategy
Buy: As close to $0.042 as possible.
Targets: $0.0535 and $0.067.
Disclaimer: The writer owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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