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Cardano (ADA) Shows Biggest Growth on Market Today, Could Be on Verge of Breakout

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Fri, 26/08/2022 - 10:18
Cardano (ADA) Shows Biggest Growth on Market Today, Could Be on Verge of Breakout
Cover image via stock.adobe.com

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Cardano stood out on the market today with one of the best performances among digital assets, as the cryptocurrency went through a short-term 5% price increase, which might hint at a potentially upcoming breakout.

Pattern on weekly chart

If we look closely at the weekly chart of Cardano, we can see an obvious and common chart pattern that appears prior to large breakouts and price swings. The ascending triangle on Cardano's weekly chart formed only a few weeks ago, when ADA failed to break through the local resistance on the Bitcoin pair.

Article image
Source: TradingView

If successful, the ascending triangle will act as a trampoline for Cardano, and the asset will enter a prolonged downtrend that we have not seen for almost a year as ADA entered the downtrend at the beginning of September.

For now, ADA has reached the top of the pattern and will trade with extremely low volatility, which is absolutely normal for assets moving inside of a triangle. In addition to decreasing volatility, the trading volume will also remain stale until a breakout or breakdown happens.

Moving averages are closing gap

In addition to the aforementioned pattern, moving averages are closing the distance between each other, which is a direct signal of an upcoming volatility spike. Traditionally, the wide gap between MAs reflects the increasing chances of a consolidation on the market, and a small gap signals the opposite.

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By the end of September, ADA should reach the end of the triangle as the gap between lines decreases even further, and we should see a spike in the volatility of the asset, which, hopefully, aims upwards.

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