(Akash Girimath – FXStreet)
– Cardano price has shot up after printing another liquidity fractal on August 28.
– After exhausting at $0.505, ADA will likely retrace to $0.478 before triggering the next leg-up to $0.530.
– A daily candlestick close below $0.423 will create a lower low and invalidate the bullish thesis for ADA.
Cardano price has been forming a liquidity fractal since June 18, and each time this pattern occurs, a bullish move follows. The latest occurrence of this fractal was on August 28, which was followed by a quick run-up that has not quite reached its target yet.
Cardano price prepares for more gains
Cardano price printed its recent buy signal in the last week of August, producing a lower low below swing lows formed up to July 26. This setup has repeatedly occurred since June 18 and continues to be an effective buy signal.
Anticipating these sell-stop liquidity runs can help traders position themselves better for the next rally. As mentioned above, the latest liquidity run formed in the last week of August and produced its final bullish confirmation on August 30.
The previous article recommended that investors enter a long position after a minor pullback to $0.425. This development was followed by a swift move to the first target at the $0.460 level. Due to strong bullish momentum, ADA cleared this level and retested $0.505, where it currently trades.
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A pullback to $0.488 or $0.478 seems likely before the next leg-up, Suggesting the best course of action would be for investors to patiently wait for a retracement before going long. Following this move, Cardano price could attempt a retest of $0.530, which is where it could form a local top.
In a highly bullish case, ADA might reach for the buy-stop liquidity resting above the equal highs formed at $0.580.
On the other hand, if Cardano price produces a daily candlestick close below $0.423, it will create a lower low, indicating that the bears are in control.
This development would invalidate the bullish thesis for ADA and potentially trigger a correction to $0.400, where buyers will have another opportunity to give the uptrend another go.
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