Having rolled back from recent highs, leading cryptocurrencies are checking key technical levels before the weekend, in some cases demonstrating a rebound. Is it worth counting on the resumption of the upward momentum in the coming days?
Today, the market is definitely focused on the speech of Fed Chairman Jerome Powell at the symposium in Jackson Hole, around which there was so much talk. It is possible that we will witness major movements in the dollar, stocks, gold and other traditional assets, depending on whether Powell announces a specific plan to curtail QE, or waits with this decision until the next FOMC meeting, which will be held in September.
Personally, I doubt that the head of the Fed will announce anything important today, since the increase in cases of infection with the COVID-19 delta strain means that he can afford to wait. Given this uncertainty, it is better to wait until his speech is over before opening new positions. And although financial markets in general may feel the impact of this event, the volatility of cryptocurrencies is likely to be relatively low. Partly for this reason, I am looking at the charts of Cardano (ADA) and Bitcoin (BTC).
Cardano is currently the third leading cryptocurrency after bitcoin and Ethereum — its market capitalization is about $ 82 billion. There is a lot of hype around this cryptocurrency, which partly explains why it continues to update the highs. While the general sentiment towards the crypt remains positive, Cardano is likely to continue to grow to new heights, although, of course, it will not do this on a straight trajectory.
At the moment, ADA/USD is at the mercy of the “bulls”:
ADA/USD is the daily timeframe of the day/USD is the daily timeframe
On the daily chart, ADA/USD bounced from the key support area of $2.46-$2.50 by the time of writing. The previous important maximum reached in May is located in this area, and the last breakdown began here. This area, which in the past played the role of resistance, now seems to be turning into support. A confident “bullish” closing on the daily chart will indicate the completion of the profit-taking and consolidation phase, and a resumption of upward momentum can be expected over the weekend. The way up is blocked by short-term resistance around $ 2.61, which previously played the role of support. The bulls need Friday’s trading to end above this level.
A bullish flag is being drawn on the 60-minute chart:
A clear breakout from this flag is needed for confirmation before we have more confidence that Cardano will reach a new high in the coming days. With a breakout, Cardano can target the next psychologically important level of $3.00, which is just above the previous record high reached earlier this week.
If the pattern does not work, and a breakout of the mentioned support zone of $2.46-$2.50 follows first, this may turn into a fall towards the next nearest support level at $ 2.20. However, it seems to me the most likely scenario in which the support will hold and a bullish breakout to a new high will follow.
Whether Cardano, along with other cryptocurrencies, will be able to continue the upward movement of recent days will depend on the general attitude towards this asset class. In order for the rest of the cryptocurrencies to retain their tendency to grow in the short term, it is necessary that, at least, the leading asset of the class, bitcoin, should stand, even if it does not strengthen.
BTC/USD – daily timeframe BTC/USD – daily timeframe
Bitcoin is also consolidating after growing for five consecutive weeks, which has stalled at the $50,000 level. At the time of writing, bitcoin was testing the strength of an extensive support zone between $46,000 and $47,000, as can be seen on the chart. Here was the zone of the previous breakthrough. In addition, the 21-day exponential and 200-day simple moving averages converge here