ADA/USD - Why 1.50 rejection is good news, and updated forecast
Hello friends!
Yesterday proved to be an unexpectedly exciting day for ADA/USD. While BTC was up 8%, ADA rallied more than 17% on market-wide upward momentum and news such as Kraken starting ADA staking.
From a TA point of view, yesterday's rally was a highly unlikely move with the price action reaching midway between the upper aqua and upper orange B-bands in the daily chart. The white EMA was still well below 50 at 36, while LSMA and RSI were both flat. The odds of getting to this standard deviation (about 2.1 SDs) were only about 7%. This is a good reminder that TA can only provide probabilities within a much wider range of possibilities.
Yesterday ADA first challenged 1.40 three times before a breakthrough to the 1.44 fib, where again it took three attempts for the resistance to break and prices to rally to just under the 1.50 level before falling back to the 1.44 fib. Another run at 1.50 came up short. Considerable resistance between 1.48 and 1.56 will make it difficult for ADA to go much higher.
While it may seem that the rejection at 1.50 is bad news for the bulls, it may be good news for investors for two key reasons:
1) Rejections at key levels often lead to corrections to recent trading levels. While it may not happen immediately, a consolidation to the 1.34 fib or lower presents a good buying opportunity (perhaps one of the last at these levels)
2) The upward momentum to rally to 1.50 suggests that the next leg up may come sooner than expected, possibly the last week of May instead of early June.
Today
Upward pressure is slowing. A test of 1.53 is possible, but prices are more likely to remain sideways.
Next 4 days
Upward pressure looks to persist. Green EMA above the white EMA suggests higher highs, though the low levels of the white EMA, RSI, and LSMA will limit upward price action. There is a strong chance that 1.53 and possibly the 1.56 ATH will be tested. A new ATH looks unlikely at this point. A rejection would likely result in a correction back to 1.25-1.35 region. Note that Friday will be another round of BTC options expiry, which may lead to a selloff that would bring down ADA prices.
Good luck and good fortune!
Yesterday proved to be an unexpectedly exciting day for ADA/USD. While BTC was up 8%, ADA rallied more than 17% on market-wide upward momentum and news such as Kraken starting ADA staking.
From a TA point of view, yesterday's rally was a highly unlikely move with the price action reaching midway between the upper aqua and upper orange B-bands in the daily chart. The white EMA was still well below 50 at 36, while LSMA and RSI were both flat. The odds of getting to this standard deviation (about 2.1 SDs) were only about 7%. This is a good reminder that TA can only provide probabilities within a much wider range of possibilities.
Yesterday ADA first challenged 1.40 three times before a breakthrough to the 1.44 fib, where again it took three attempts for the resistance to break and prices to rally to just under the 1.50 level before falling back to the 1.44 fib. Another run at 1.50 came up short. Considerable resistance between 1.48 and 1.56 will make it difficult for ADA to go much higher.
While it may seem that the rejection at 1.50 is bad news for the bulls, it may be good news for investors for two key reasons:
1) Rejections at key levels often lead to corrections to recent trading levels. While it may not happen immediately, a consolidation to the 1.34 fib or lower presents a good buying opportunity (perhaps one of the last at these levels)
2) The upward momentum to rally to 1.50 suggests that the next leg up may come sooner than expected, possibly the last week of May instead of early June.
Today
Upward pressure is slowing. A test of 1.53 is possible, but prices are more likely to remain sideways.
Next 4 days
Upward pressure looks to persist. Green EMA above the white EMA suggests higher highs, though the low levels of the white EMA, RSI, and LSMA will limit upward price action. There is a strong chance that 1.53 and possibly the 1.56 ATH will be tested. A new ATH looks unlikely at this point. A rejection would likely result in a correction back to 1.25-1.35 region. Note that Friday will be another round of BTC options expiry, which may lead to a selloff that would bring down ADA prices.
Good luck and good fortune!
This suggests that we may be closer to the next leg up than anticipated that there is strength in the market.
The next level up to watch is 1.60. If 1.60 resistance is broken, then the region between 1.77-1.83 will be in play.
Because this is an impulse move, indicators in several timeframes show mixed signals and prices well above what would normally be likely. This suggests that this is not a sustained upward move. The new ATH could be a false breakout and a retracement could follow soon, particularly as tomorrow's BTC options expiry nears.
ADA will need to hold above the 1.53 level to avoid a retracement back into the trading channel between 1.03 and 1.55. A retracement would provide another opportunity for accumulation, particularly if ADA reaches the 1.30 region or below.