The Cardano/Ethereum (ADA/ETH) pair appeared to have broken out of an inverse head and shoulders reversal pattern on April 28, 2018 when it went above resistance of 0.0005. Unfortunately for breakout players, the market was not yet ready to launch a bull run. Those who bought the bottom used the breakout as an opportunity to take heavy profits.
In addition, a bearish divergence was spotted on the daily RSI. This was a sign of underlying weakness. As a result, ADA/ETH broke 0.0005 support on May 3. The price action trapped those who bought the breakout. This sparked a selling frenzy that saw the pair generate 20 red candles in 25 days.
While the ADA/ETH looks bearish right now, it appears that the bottom is in sight.
Technical analysis show that ADA/ETH is well on its way down to support of 0.00027. We believe bulls will be able to defend it for several reasons.
First, the market is in extreme oversold territory so we can expect a selling relief soon. Also, 0.00027 is the pair’s strongest support level. Bulls are bound to preserve it to keep the market stable. Lastly, the 4-day, 8-day, and 21-day moving averages are detached from the daily candle’s body. This indicates that the move down is not sustainable.
The strategy is to buy as close to 0.00027 as possible. If bulls hold on to the support, the market will most likely bounce to our target of 0.00035. We’ll revisit the trade once the target is hit.
The process may take a month.
Daily Chart of ADA/ETH on Binance
As of this writing, the Cardano/Ethereum pair is trading at 0.00028619 on Binance.
Summary of Strategy
Buy: As close to 0.00027 as possible.
Disclaimer: The writer owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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