In a recent Cardano (ADA) trading strategy session, prominent crypto analyst Benjamin Cowen issued a warning about Cardano, a leading competitor to Ethereum (ETH). Cowen drew attention to the striking similarities between Cardano’s current price action and its performance in the latter half of 2019, a period marked by a consistent downward trend for ADA.
To understand Cowen’s analysis, it’s helpful to have a basic understanding of technical analysis. Technical analysis is a method used by traders to predict future price movements based on historical data. One of the tools used in technical analysis is the bull market support band. This is a range between two moving averages – the 20-week simple moving average (SMA) and the 21-week exponential moving average (EMA).
According to a report by The Daily Hodl published earlier today, In a video release don 24 July 2023, Cowen pointed out that ADA’s price action in 2023 has mirrored its 2019 behavior, forming double-top patterns and dipping below the bull market support band. A double-top pattern is a reversal pattern that is formed after there is an extended move up. The “tops” are peaks that are formed when the price hits a certain level that can’t be broken. After hitting this level, the price will bounce off it slightly, then return to test the level again. If it can’t break this level for the second time, then the price will usually plummet.
In 2019, despite several price pumps, with increases of up to 41%, these rallies were short-lived and followed by a slow bleed-out in the altcoin market. Cowen highlighted that even after the market capitulated to new lows, it did not mark the bottom for ADA, as the token rallied and then faded again.
Cowen also discussed ADA’s performance against Bitcoin, i.e., the ADA/BTC trading pair. He noted that ADA didn’t bottom against BTC until the third quarter of 2019 and remained at those lows for another six months before rallying. Cowen suggested that a similar pattern could play out for ADA in the current market cycle.
As of the time of writing, ADA is trading at $0.305, up 0.5% in the past 24-hour period.