Cardano was in a perfect triangle pointing upwards.
Buyers jumped in trying to break the base earlier with market sentiment regained.
It will be of vital importance that price action close above $ 3.04 on the daily chart.
Cardano (ADA) has been in a bullish triangle since August 20. The ascending green trendline of this triangle has been confirmed three times during the life cycle of the triangle, demonstrating the importance of the trendline. On the upside, for the flat baseline, $ 3.04 was tested once on August 29th. However, the price fell rapidly the day after, but this showed that short-term gains were being taken and that sellers marked this level as a good entry point for them.
Cardano still has excellent upside potential
The reason for this possible development of the bull trap is for two reasons. The first reason is the way buyers have gained control. The green ascending trend line from July 20th was chopped up on August 30th and didn’t look very appropriate as an entry point. A good element to remember is that SHIB could rise above the 55-day Simple Moving Average (SMA). But the upside risk is the triple resistance belt hanging above current price action.
ADA / USD daily chart
A daily close above $ 3.04 is important because it will attract more buyers to the trade. The USD 3.04 level then becomes support and acts as a jump point towards USD 3.40.
If we don’t get a daily close, it could indicate that there has been too much profit-taking and trading is subsiding. Sellers will attempt to push price action back towards the triangle’s green ascending trendline. A break down could push ADA to $ 2.30. This is where the triangle started and just above it is the monthly pivot at $ 2.35.