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Cardano Price Analysis: 07 February

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Source: Pixabay

Cardano was quite bullish in the short-term charts as it soared past previous all-time highs. Its market cap has grown by leaps and bounds recently, and ADA now sits on the fourth position in the list of top cryptocurrencies sorted by market capitalization.

Cardano 30-minute chart

Cardano Price Analysis: 07 February

Source: ADA/USDT on TradingView

A bullish pattern was seen on the charts, however, right alongside it was a bearish divergence on the lower timeframes that were analyzed. ADA has been climbing steadily over the past two weeks. The key levels in this rally have been $0.3, $0.35, $0.45, and $0.55, and ADA has blown past them all.

Recent news from IOHK that the February update, essentially a hardfork as the Mary update was deployed on the Cardano public testnet, will “unlock the mechanism for users to create their own tokens for myriad applications: Decentralized Finance (DeFi), and countless other business use cases”. This is exciting news for ADA’s adoption and could have had a hand in driving the prices.

There is a possibility of a pullback but it was not yet signaled for ADA.

Reasoning

A bull flag (orange flagpole, the cyan channel being the flag) was formed on the 30-minute chart. This projected a technical target of $0.755 for ADA to achieve over the next few hours. The highlighted region shows a bullish target for ADA, while the Fibonacci retracement levels plot levels of support.

A slight worry for bulls was the 30-minute and the 1-hour charts showed bullish momentum waning over the past few hours even as prices surged. This bearish divergence could prevent ADA from achieving a target of $0.755.

Conclusion

Dropping beneath the $0.64 mark will invalidate the bull flag pattern, which has presented ADA a target of $0.755 for profit-taking. A bearish divergence was seen but has not yet played out. A Doji hourly candle with heavy trading volume could signal a short-term reversal for ADA.

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Having studied Chemical Engineering, Akashnath's focus is on the UK and Indian markets and especially crypto assets. He is devoted to technical analysis and is always on the lookout for investment opportunities.