Cardano price analysis (8 September): is a short-term top in place?
Cardano is currently correcting an uptrend: but where might it go next?
Cardano is the third-largest cryptocurrency by market capitalisation. Its market cap surged from about $33bn on 20 July to more than $99bn on 2 September, according to CoinMarketCap. This massive rise in a short time was largely driven by the excitement around the major network upgrade, dubbed Alonzo, which will allow smart contracts to be built into the network.
Smart contracts are computer codes that execute automatically when predetermined conditions are met, without the need for a centralised party.
Input Output Hong Kong (IOHK), the company behind cardano, tweeted on 2 September that the upgrade was successfully launched on the blockchain’s testnet and said that things looked to be on track for a mainnet launch on 12 September.
Some believe that with smart-contract features built-in, cardano will become a more formidable rival to ethereum.
Will traders sell the news or will cardano’s price go up after the upcoming network upgrade? What do the charts suggest? Read our cardano price trend analysis to find out.
Cardano price technical analysis: weekly chart
Cardano’s price surged from $1.02 on 20 July to an all-time high of $3.10 on 2 September. Generally, vertical rallies are unsustainable and are often followed by sharp declines. That is what seems to have happened in the past few days.
Although the price hit a new high above $3, the negative divergence on the relative strength index (RSI) was a warning that the bullish momentum was losing steam. Aggressive profit-booking by traders has started a correction, which may find support near the previous closing high at $2.30.
If the bulls flip this level into support, it will suggest that sentiment remains positive and traders are viewing dips as a buying opportunity. The bulls will then make one more attempt to resume the uptrend.
A breakout and close above $3.10 could start the next leg of the uptrend, which could reach $3.50 and then $4.20. Conversely, if the bears pull and sustain the price below $2.30, the pair could extend the decline to $1.80.
The cardano price weekly analysis shows that traders are booking profits after the recent rise.
Cardano price technical analysis: daily chart
The negative divergence on the RSI was a warning that the bullish momentum was weakening. Moreover, the failure of the bulls to push and sustain cardano’s price above $3 may have attracted profit-booking.
The bulls are likely to defend the 38.2% Fibonacci retracement level at $2.245, which is just below the previous high. If the price rebounds off this level, the bulls may again try to push the pair toward $3.
On the other hand, if bears sink the price below $2.245, the correction could deepen to the 50% retracement level at $2.018 and then to the 61.8% retracement level at $1.79. The deeper the fall, the longer it will take for the next leg of the uptrend to begin.
How to trade Cardano this week
Cardano is currently witnessing aggressive profit-booking. When the sentiment turns negative, the price usually slices through strong support levels. Hence, traders may keep the support levels in mind but wait for the decline to stop before buying.
The views and opinions expressed in the article are those of the author and do not constitute trading advice. Trading and investing involve substantial risks and you should do your own research or contact your financial advisor before arriving at a decision.