Cardano price fake-out? ADA’s 45% rebound in two days could trap bulls

The price of Cardano (ADA) climbed from $ 0.48 on May 30 to $ 0.68 on May 31 – 45% accumulation in less than 48 hours. But ADA / USD failed to extend its rally higher and fell by almost 13.75% from its weekly high.

ADA price: bear market vibes

Cardano’s price retreated sharply on June 1, giving up part of the gains secured in the previous two days. The question now arises as to whether or not the ADA / USD pair can extend its recovery trend, especially as it trades almost 80% below its September 2021 peak of $ 3.16.

Interestingly, the downside began after ADA tested its 50-day exponential moving average (50-day EMA; the red wave in the chart below) as resistance. Also, the pair moved lower along with broader corrective sentiment across riskier assets, including Bitcoin (BTC) and the S&P 500 (SPX).

Now, Cardano’s token risks further price correction, according to Digital Trend, a financial analysis contributor at SeekingAlpha. noting that ADA has seen sharp price bounces in the past that have turned into bullfighting traps, adding:

“In March, we saw the ADA go south from $ 0.80 to more than $ 1.24 in a few weeks. This, to me, looks like another fake.”

Several fundamental factors also support a bearish outlook. On June 1, the Federal Reserve will begin downgrading its $ 9 trillion portfolio, likely creating more adverse winds for risky assets, including Cardano.

1/16

Today it starts.

Quantitative Stress.

So what does it mean? Is it a straight down market? Do we know that all is well if nothing bad happens the first day?

How do you navigate this?

– Adam Cochran (adamscochran.eth) (@adamscochran) June 1, 2022

“I don’t think we know the effects of QT [quantitative tightening] yet, especially since we haven’t done much of this thinning of the balance sheet much in history, ”Dan Eye, the chief investment officer of Fort Pitt Capital Group, told Market Watch, adding that removing liquidity from the market “would affect multiples in valuations to some degree.”

Cardano price paints bull pennant

From a technical perspective, Cardano could continue its recovery trend in June due to a bullish continuation pattern.

Related: Bitcoin’s recent gains have traders calling bottom, but various metrics remain bearish

ADA has solidified within what appears to be a “bull pennant,” confirmed by the price fluctuating within a triangular structure after a massive move upward, called a “flagpole”.

As a rule, a bull pennant dissolves after the price breaks above its uptrend and increases as much as the height of the flagpole.

In other words, a bullish target of $ 0.77 in June, more than 25% of today’s price.

ADA / BTC sees a similar additional arrangement

ADA painted a similar pennant arrangement against Bitcoin, raising the chances of a rise for the ADA / BTC pair in June.

As a result, the decisive break of ADA / BTC above the uptrend of the pennant could raise it to 0.00002355, more than 23% of today’s price.

The views and opinions expressed herein are those of the author only and do not necessarily reflect the views of Cointelegraph.com. Every investment and business move involves risk, you need to do your own research when deciding.