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Cardano price’s liquidity fractal strikes again, forecasts 20% upside


www.fxstreet.com 22 September 2022 03:54, UTC
Reading time: ~2 m

  • Cardano price continues the tradition of liquidity run after it sweeps the August 30 swing low at $0.438.
  • Investors can expect ADA to trigger a 14% run-up to $0.505, which could extend to $0.530 depending on market conditions.
  • A daily candlestick close below $0.435 without a quick recovery will invalidate the bullish thesis.

Cardano price shows a repeating pattern before it triggers an explosive run-up. This has been mentioned as a liquidity fractal in previous articles. The fractal is simple and involves collecting the sell-stop liquidity below previously formed lows. After the liquidity is swept, ADA recovers above the said swing low and kick-starts a rally. 

So far, there have been seven distinctive liquidity runs, with the latest happening on September 21. 

Cardano price ready to ride the wave

Cardano price dug below the $0.435 support level on September 21 as it dropped 13%. This move was followed by a quick recovery above the said barrier, indicating a willingness to move higher and the presence of sidelined buyers.

As mentioned above, this is a liquidity fractal in formation that signals the start of a rally. Going forward, investors can expect Cardano price to rally to $0.472 and retest the $0.505 hurdle. This move would constitute a 14% upswing, but it is not where the upside will be capped.

Depending on the market conditions, participants can look for a flip of the $0.505 resistance level, which will propel Cardano price to fill the imbalance, aka Fair Value Gap (FVG).

In total, this run-up would constitute a 20% gain and is likely where the upside is capped for ADA. 

ADA/USDT 1-day chart

ADA/USDT 1-day chart

On the other hand, if Cardano price fails to stay above $0.435, it will denote a weakness in buyers and will lead to a takeover by bears. If ADA produces a daily candlestick close below $0.435 without a quick recovery,  the bullish thesis will be invalidated.

In such a case, investors should be ready for a 12% crash in Cardano price to a weekly support level at $0.380.

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