After another big dip and rally in July, ADA is back to retesting the major psychological level of 1.5000. With the pair now trading above that level, is this the breakout the bulls have been waiting for or another short opportunity for the bears?
Upside Breakout Confirmed on ADA?
Today we’re taking another look at the Cardano project, a proof-of-stake blockchain platform with a strong emphasis on peer-reviewed research and development. The blockchain is powered by the native utility token, ADA, and for more information on the Cardano Project, check out the project homepage here.
In our last look at ADA/USD, we saw the market trading just under the 1.5000, asking whether or not it was time for the pair to break higher. It looks like we never got that break higher, likely on continued negative sentiment on the crypto space in July, mainly due to continued push back from governments and central banks (e.g., PBOC steps up crypto crackdown, Stablecoins Should Be More Strictly Regulated, Fed Chair Tells Congress, EU proposes ban on anonymous cryptocurrency transactions, etc.).
That sentiment brought ADA/USD back to the major 1.0150 major support area, where the bulls once again took control and rallied back with the rest of the crypto space. This move higher correlates with a short squeeze in bitcoin as exchanges significantly reduce trading leverage at the end of July.
ADA’s bullish run may also have to do with the imminent release of smart contracts on the Cardano blockchain. Cardano found Charles Hoskinson recently announced that we could see this significant upgrade come somewhere between the end of August/early September, and if all goes well, this could be the big catalyst that draws in fresh capital into ADA and push prices higher. And vice versa, if the upgrade is delayed and/or there are significant issues with the system, this could draw in a selling response from traders rather quickly.
Given that the Cardano team is known for their rigorous research and development processes, we think the odds favor the bulls for now. We will be on the look out for a successful system upgrade and sustained price action above the 1.5000 before considering building a long position.
But we’re also aware that risk sentiment can be a huge driver, and the rapid rise of the Delta variant/its affect on the global recovery, as well as emerging crypto regulation are developments to keep track of for this market as well.
What do you guys think? Will ADA stay above 1.5000 and make its way to May highs? Or will the next upgrade fail and spark a sell off?
Let me know in the comments below on ADA, and as always, remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t simply follow what I do.
