Cardano Short Could Yield 50%+ Profit

5 Nov 2018

Today, we’re going to take a look at Cardano because it is another coin for which there has been a specific price review requested of it.

So, let’s see what the price action on this project is at the moment.

We’re going to start off with the basic chart here and then see what we can identify from there.

ADA/BTC Pairing



Alright, so as expected, Cardano is still more than likely in the midst of a humongous downtrend.

So, let’s see what we can discover after drawing a few trendlines.

Drawing Trendlines



Above, we can see a major (former) support point that was eventually violated, followed by a steep (50%) decrease in the price, establishing a long-term (potential) support at 1000 sats.

That’s no longer relevant, however, so let’s see what else we’re looking at on the chart here:



Again, the picture above, we can see a (fairly) established support point at 1100 sats.

This has only been tested twice and briefly at that, so there should be no strong reliance among traders on this point.

Since we aren’t able to glean too much information from the daily resolution, let’s go ahead and scroll in and see what else we can find.

4-Hour Chart [Exponential Moving Averages]

So, this is somewhat arbitrary, but to get an idea of the more immediate price movement, let’s go ahead and check out the EMA indicators on the H4 chart, below:



Thus far, the indicators are bullish for the following reasons:

1. The EMA indicators (12, 26, and 50) are all below the candles on the chart.

2. The EMA-12 > EMA-26 > EMA-50; which is a bullish stack for EMA indicators (always).

3. There’s a bit of room between the current price action and the EMA-12, which is extremely bullish.

4. The EMA-26 recently crossed over the EMA-50. Doing the math on that, since we’re on the H4 chart, that means that the last 104 hours [a little over 4 days], have been strong for Cardano in terms of its price movement against Bitcoin.

Conclusion? Price movement has been ridiculously for Cardano as of recent, and the EMA indicators are making it seem like it will continue that pattern (on the H4 chart).

Bump and Run Pattern

We’ve covered this a lot, and it has ended up being remarkably accurate in the world of crypto.

Bump-and-Run patterns are a classic sign of over-extension, and it usually results in disaster (check out prior price analysis articles to see how this has played out before).

Before we get into it though, we need to assess what the hell we’re talking about by ‘Bump and Run’ (BARR pattern).

Check out the following:



That’s the BARR pattern above, and its usually a sign of an impending crash in the price (remember we’re on the ADA/BTC pattern, so be mindful of the implications of this on the USD value; i.e., if Bitcoin is still increasing in value, then a drop in ADA’s BTC valuation is not as devastating).

So, the likely price action that would follow (should this pattern complete itself) would be:



Potential Reverse Adam and Eve Action Going On as Well



What the heck is that?

We would use the following qualifications as shown below:

1. There’s a downward trend leading to the pattern.

2. There are two distinct valleys that do appear to be different

3. The rise between the bottoms is not quite 10% yet!

4. The two bottoms touch the same support (in fact, the second one establishes the support set by the first one).

5. Price has exceeded the neckline.

So, is this confirmed? Sure.

Dilemma With Conflicting Chart Patterns

We have one chart pattern that is signaling a major impending bearish move (bump and run; BARR) and another that is signaling a continued increase in the price (Adam and Even Double Bottom).

Which one will win out?

Chances are the BARR will. Why? Because the Adam and Eve Double Bottom is almost finished. It’s important to note that reversal patterns do not last forever. A double-bottom does not mean that the price will infinitely ricochet upward!

However, the BARR has yet to play out, so we should watch for that one.


Zerononcense Reversion Ribbon V2 (H4)

Time to bust out one of the prized Zerononcense custom indicators.

Check it out:



If you’re not familiar with this indicator, do not worry, we’ll tell you everything that you need to know about this one here:

The reading is bearish.

Why?

1. We see a cross signaling a bearish downturn in the price.

2. The line is deep red, which is signaling impending bearish price action.

3. The last candle is red.

4. All momentum is gone (the actual ribbon was pointing downward a long time ago).

5. The light green candles should be indicating for us that the price movement was weak to begin with.

So, judging from this indicator alone, this corroborates our assumptions about the BARR pattern formulating on ADA (Cardano).

Relative Strength Index(14) [H4]



Absolutely zero divergence to be spotted here, not a problem.

What is notable is that the RSI(14) is nearly in the overbought region for the H4, and it also failed to complete a ‘higher high’ after initially sneaking into the overbought zone three periods ago.

Thus, it appears that the price action is currently waning.

Balance of Power RSI

The BoP RSI is still climbing



This means that accumulation is still occurring on the coin. However, there have been intermittent periods of selling. This does not appear to be due to whale activity either (no divergence between the indicator and the chart), so this is a ‘raw’ market at the moment (just a bunch of regular traders, trading; speculating).

Conclusion

Our bets are on the price heading downward.



In specific, we believe that the EMA-50 on the H4 (it’s a magnet time frame for some reason) will provide the greatest pulling force on the price.

If so, this will constitute a 5% loss (not much; 50%+ gain for shorts on x10 leverage though).

A further fall would yield -8.90%. That would result in an 89.90% gain from a short using x10 leverage. So, pretty sufficient profits.

So, the idea would be to enter into a short right now (or perhaps wait until you’re “sure” that the price action will alleviate itself) before placing a mean short on Cardano [again, this is just an idea; not financial advice].

The R/R on the trade would appear as follows:



Disclaimer: This is article is not meant to be trading/financial/investment advice, there are only ideas encompassed within. The author is not currently invested in Cardano or any of its competitors at the time of release and was not at the time of writing.