An analyst has recently pointed out that if history repeats itself, Cardano’s price could resume its upward trend and potentially rally to $7. This prediction is based on a comparison between ADA’s current consolidation phase and its previous trend from late 2020. By examining the chart, the analyst, Ali, identifies similarities in the price movement of the asset over the last few years. As depicted in the graph shared by Ali, ADA experienced a phase of consolidation in the lead-up to the 2021 bull run, moving within a parallel channel.
A parallel channel in technical analysis refers to an area bounded by two parallel trendlines, within which the price of an asset moves for a period of time. The upper line of the channel typically acts as resistance, potentially indicating a local top, while the bottom line can act as support, signaling a possible bottom for the asset. Breaks beyond these trendlines can provide insights into the continuation of the trend. In the case of ADA, if the price manages to escape above the channel, it could signal a bullish trend taking over.
From the chart, it is evident that ADA briefly fell below its parallel consolidation channel in March 2020. However, this break was attributed to the anomalous COVID-19 crash and can be disregarded when considering the long-term picture. Since mid-2022, Cardano has been exhibiting movement within a similar parallel channel. The current consolidation phase mirrors the behavior of late 2020, as observed by the analyst.
Analyzing the past consolidation phase, it took until mid-2020 for ADA to find a break above the pattern. The initial break was not entirely clean, as the asset retraced back to retest the upper line before embarking on a massive run in late 2020. Based on this historical pattern, analyst Ali suggests that ADA could resume its upward trend around April. The projected continuation of the pattern could potentially result in an upswing towards $0.80, followed by a brief correction to $0.60, and ultimately, a rally to $7.
ADA’s current spot price indicates that a rally to $0.80 would represent a 60% increase, while reaching the target of $7 would imply a substantial rise of 1,300%. However, whether Cardano follows this projected path remains to be seen. It is important to note that the cryptocurrency has faced challenges in the past week, with its price decreasing by 13% towards the $0.50 level.
Cardano (ADA) holds the potential for significant price appreciation if historical patterns repeat themselves. Analyst Ali’s analysis highlights the parallels between ADA’s current consolidation phase and its trend from late 2020. The projection of a potential rally to $7 generates excitement among ADA investors, as it suggests the possibility of substantial gains. However, it is essential to conduct personal research and consider the inherent risks associated with investing before making any decisions.
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