Above: Cardano (ADAUSD)
Cardano’s daily candlestick close for October 20th was bullish – the most precise and bullish daily candlesticks since August 18th. In addition, the candlestick pattern was a bullish engulfing candlestick. Engulfing candlesticks are some of the most sought-after candlestick patterns because they represent such significant strength and bias in a particular market direction – in Cardano’s case, that would be higher. During the UK and EU trading session and into the early NY session, Cardano looked poised to break out higher. It has moved higher by as much as 6% and looking poised to threaten a breakout above the Cloud. However, that did not occur.
Instead, Cardano was rejected against the shared resistances at $2.22 (Senkou Span B and the Kijun-Sen) as well as the 38.2% Fibonacci retracement at $2.38. As a result, it is now trading in the same conditions on Tuesday: below the Tenkan-Sen, Kijun-Sen, Senkou Span A, and Senkou Span B. If Cardano closes below $2.22, then this will be the fifth consecutive daily close below the Cloud. As a result, bulls may have concerns that today’s trading behavior is a precursor to some lower price for Cardano.
One positive development on the daily Ichimoku chart for Cardano is the status of the Optex Bands. Most cryptocurrencies currently show the Optex Bands reading near extreme overbought conditions – Cardano is the opposite. Cardano’s Optex Bands are nearly right on top of the first oversold level. Cardano could test the Fibonacci confluence zone near the $2.00 before finding support, and that would likely put the Optex Bands into extreme oversold levels. From there, Cardano could launch higher.
Ultimately, the close that I need to see, to be convinced that Cardano is on the way to new all-time highs, is when the close is above the Cloud and the Chikou Span is above the candlesticks. Both of those conditions will be true if Cardano can close at or above $2.36.
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