The price of Cardano (ADA) has caught the attention of analysts who suggest that if history repeats itself, a significant price rally could be on the horizon. According to a recent post by analyst Ali, ADA’s current consolidation phase closely mirrors its behavior in late 2020, indicating a potential upswing. In this article, we will delve into the details of this analysis and explore the possibility of ADA reaching $7.
Ali’s analysis is rooted in the concept of parallel channels, which are areas characterized by two parallel trendlines within which an asset’s price moves for a certain period. The upper line acts as resistance, potentially indicating local tops, while the bottom line acts as support, possibly signaling a bottoming out phase. Breaks beyond these lines can suggest a continuation of the trend in that direction.
During the lead-up to the 2021 bull run, ADA was confined within a parallel channel, as depicted in Ali’s chart. It is worth noting that parallel channels can be angled, encompassing both uptrends and downtrends. However, in the context of this analysis, a channel parallel to the x-axis is of interest as Cardano’s price movement during the relevant periods was flat.
Notably, ADA briefly breached its parallel consolidation channel in March 2020. However, this break was largely a result of the anomalous COVID-19 crash and may be disregarded in the long-term picture. Since mid-2022, Cardano has been moving within a parallel channel similar to its late 2020 behavior.
Ali highlights that Cardano’s current consolidation phase appears to mirror its behavior from late 2020. During the previous consolidation phase, it took until mid-2020 for ADA to break above the pattern. However, this breakout wasn’t entirely clean, as the asset retraced back to retest the upper line before embarking on a massive run in late 2020.
Building on the historical similarities, Ali suggests that if history repeats itself, ADA might resume its upward trend around April. This pattern continuation could potentially lead to an upswing towards $0.80, followed by a brief correction to $0.60, and ultimately a target of $7. From the current spot price, a rally to $0.80 would imply a 60% increase, while reaching $7 would represent a staggering rise of 1,300%.
It is important to note that Cardano has experienced struggles in the past week, with its price declining by 13% towards the $0.50 level. As with any investment, prices are subject to volatility and market fluctuations. Therefore, it remains to be seen whether Cardano will indeed follow the potential path outlined by the analyst.
Cardano’s price projection has sparked interest among analysts, with Ali pointing out the resemblance between ADA’s current consolidation phase and its behavior in late 2020. The concept of parallel channels serves as the foundation for this analysis, highlighting the significance of price movements within these channels. If history repeats itself, ADA could potentially witness a significant price rally, with a target of $7. However, it is crucial to approach these projections with caution, as market conditions can change rapidly.