ADA → Cardano to $0.40? or $1.40? Get your Longs Ready!
Updated
ADA completed its 230% price increase since October 2023 and now appears to be finding some resistance. Should we short here?
How do we trade this? 🤔
Shorting is not ideal on the Daily timeframe. Since October 2023, ADA has put in three legs in a bull trend, a double-top reversal pattern that has come off of an ascending wedge (bearish pattern). We're now finding resistance below the Daily 30EMA with a gap down to the Daily 200EMA. This analysis screams a two-legged pullback to the 200EMA, likely in alignment with the Bitcoin halving that's about to happen in April 2024.
Short on the 1HR timeframe, but get your equity ready for a long position when ADA comes into contact with the $0.53-$0.57 price area. Look for a strong bull candle closing on or near its high off of the Daily 200EMA, this is our signal bar and a reasonable one to enter on with a 1:2 Risk/Reward Ratio, aiming for a conservative target of $0.775.
A confirmation bar should take us somewhere in the $0.60-$0.65 range. If we see this, given the crypto market's similar sentiment after the halving, it's reasonable to enter at a 1:2 risk reward aiming for the $1.20 area. It's reasonable to take half profits at 1:1 Risk/Reward and swing the latter half of your position to 1:2, 1:3, or even 1:4 Risk/Reward on this timeframe, depending on how the price action plays out.
This analysis is in alignment with my recent ADA Lifetime Analysis as seen here:
💡 Trade Idea 💡
Long Entry: $0.55
🟥 Stop Loss: $0.4375
✅ Take Profit #1: $0.663
✅ Take Profit #2: $0.775
⚖️ Risk/Reward Ratio: 1:2
🔑 Key Takeaways 🔑
1. Three legs in a bull trend
2. Double top reversal pattern which has come off of an ascending wedge (bearish pattern)
3. Finding resistance below the Daily 30EMA with a gap down to the Daily 200EMA.
4. Look for a 2-legged pullback to the 200EMA, likely in alignment with the Bitcoin halving that's about to happen in April 2024.
5. RSI is at 48.00 and Above the Moving Average, supporting the idea of a pullback to the 30.00 area below the Moving Average.
💰 Trading Tip 💰
It's reasonable to take half profits at the first resistance target in a long trade or the first support target in a short trade. Using a 1:1 Risk/Reward Ratio for your first target, you can move your stop loss up to your entry price, locking in profits. This allows you to watch the rest of the trade execute without worrying about losing money, which helps improve trading psychology and the equity in your account.
⚠️ Risk Warning! ⚠️
Past performance is not necessarily indicative of future results. You are solely responsible for your trades. Trade at your own risk!
Like 👍 and Follow to learn more about:
1. Reading Price Action
2. Chart Analysis
3. Trade Management
4. Trading Psychology
How do we trade this? 🤔
Shorting is not ideal on the Daily timeframe. Since October 2023, ADA has put in three legs in a bull trend, a double-top reversal pattern that has come off of an ascending wedge (bearish pattern). We're now finding resistance below the Daily 30EMA with a gap down to the Daily 200EMA. This analysis screams a two-legged pullback to the 200EMA, likely in alignment with the Bitcoin halving that's about to happen in April 2024.
Short on the 1HR timeframe, but get your equity ready for a long position when ADA comes into contact with the $0.53-$0.57 price area. Look for a strong bull candle closing on or near its high off of the Daily 200EMA, this is our signal bar and a reasonable one to enter on with a 1:2 Risk/Reward Ratio, aiming for a conservative target of $0.775.
A confirmation bar should take us somewhere in the $0.60-$0.65 range. If we see this, given the crypto market's similar sentiment after the halving, it's reasonable to enter at a 1:2 risk reward aiming for the $1.20 area. It's reasonable to take half profits at 1:1 Risk/Reward and swing the latter half of your position to 1:2, 1:3, or even 1:4 Risk/Reward on this timeframe, depending on how the price action plays out.
This analysis is in alignment with my recent ADA Lifetime Analysis as seen here:
💡 Trade Idea 💡
Long Entry: $0.55
🟥 Stop Loss: $0.4375
✅ Take Profit #1: $0.663
✅ Take Profit #2: $0.775
⚖️ Risk/Reward Ratio: 1:2
🔑 Key Takeaways 🔑
1. Three legs in a bull trend
2. Double top reversal pattern which has come off of an ascending wedge (bearish pattern)
3. Finding resistance below the Daily 30EMA with a gap down to the Daily 200EMA.
4. Look for a 2-legged pullback to the 200EMA, likely in alignment with the Bitcoin halving that's about to happen in April 2024.
5. RSI is at 48.00 and Above the Moving Average, supporting the idea of a pullback to the 30.00 area below the Moving Average.
💰 Trading Tip 💰
It's reasonable to take half profits at the first resistance target in a long trade or the first support target in a short trade. Using a 1:1 Risk/Reward Ratio for your first target, you can move your stop loss up to your entry price, locking in profits. This allows you to watch the rest of the trade execute without worrying about losing money, which helps improve trading psychology and the equity in your account.
⚠️ Risk Warning! ⚠️
Past performance is not necessarily indicative of future results. You are solely responsible for your trades. Trade at your own risk!
Like 👍 and Follow to learn more about:
1. Reading Price Action
2. Chart Analysis
3. Trade Management
4. Trading Psychology
Note
ADA has hit a lower low in the bear pullback! The price will likely fall to the Daily 200EMA around $0.50 where we will look for a strong bull signal bar and an entry around $0.55. Bitcoin is also showing signs of a double-top after three pushes up to the 2021 high price area. For the next couple of weeks at least, I would expect some generally bearish price action.
Note
ADA made its move along with the rest of the crypto market to the downside, exceeding the Leg #2 pullback support area and falling right down to the Push #1 price area of $0.39. This would complete the expected 2-legged pullback, so I would expect the pullback to the upside of around $0.49 before another fall into a double-bottom, or another leg down to the $0.30-$0.35 range.
We have to remember that it's Bitcoin halving season after three pushes up near the 2021 high, we should be in bearish territory for some time.
A new ADA analysis is coming soon!
-Joe Dean
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