An analyst has explained that if history repeats for Cardano, its price could resume its uptrend and rally to $7. Here’s when this could happen.
Cardano Could Follow Same Price Trajectory As Back In 2020
In a new post on X, analyst Ali has discussed how ADA’s latest consolidation phase has been mirroring its trend from late 2020. Below is the chart that the analyst has shared for the cryptocurrency.
The trend in the price of the asset over the last few years | Source: @ali_charts on X
As Ali has highlighted in the graph, ADA had been stuck inside a phase of consolidation for a couple of years in the lead-up to the 2021 bull run. Back then, the asset had been moving inside a parallel channel.
A “parallel channel” in technical analysis refers to the area made up of two parallel trendlines inside which the price of any commodity moves for a period of time.
The upper line of such a channel generally provides resistance to the price and can thus be a probable point of a local top. Similarly, the bottom line can act as support and help the asset bottom out.
Sustained breaks beyond either of these lines can suggest the continuation of the trend in that direction. For example, if the asset manages to escape above the channel, then it can be a signal that a bullish trend is now taking over.
Parallel channels can be at an angle as well, enclosing uptrends or downtrends. In the context of the current discussion, though, a channel parallel to the x-axis is of interest, as Cardano’s price movement during the periods relevant here was completely flat.
From the chart, it’s visible that ADA had briefly plunged below its parallel consolidation channel during March 2020. However, this break was a result of the COVID-19 crash, which was an anomalous event, so it may be safe to disregard it in the long-term picture.
Since around mid-2022, the coin has also been moving inside a similar parallel channel. “Cardano’s current consolidation phase mirrors its late 2020 behavior,” explains the analyst.
During the past consolidation phase, it took until mid-2020 before ADA managed to find a break above the pattern. The break wasn’t an entirely clean one, though, as the asset returned back for a retest of the upper line not too long after before finally setting off on a massive run in late 2020.
“If history repeats itself, we might see ADA resuming its upward trend around April,” says Ali. “This pattern continuation could potentially lead to an upswing toward $0.80, a brief correction to $0.60, then $7!”
From the current spot price of the cryptocurrency, a rally to $0.80 would mean an increase of about 60%. At the same time, a run towards the eventual $7 target would imply a rise of a whopping 1,300%. It now remains to be seen if Cardano does end up following this potential path highlighted by the analyst or not.
Cardano has struggled during the past week as its price has come down 13% towards the $0.50 level.
Looks like the price of the asset has been going down recently | Source: ADAUSD on TradingView
Featured image from Michael Förtsch on Unsplash.com, charts from TradingView.com
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