Was ADA’s euphoric post-FOMC rally a bull trap?

  • Cardano price was rejected from the upper boundary of a newly formed descending parallel channel.
  • The FOMC-induced 14.62% rally allowed traders to short ADA.
  • Cardano’s price hemorrhage may continue as long as it remains below the Ichimoku cloud.

Cardano’s price moved 14.62% following Wednesday’s FOMC meeting, which saw interest rates rise 75 basis points. A euphoric rally also engulfed the entire market, with the total market capitalization returning to the $1 trillion mark.

Rising cryptocurrency prices immediately after interest rate hikes have become a norm over the past few months. However, crypto assets tend to feel pressure after a few weeks as investors make capital adjustments.

What’s next for the cardano price?

The smart contracts token is hovering slightly above $0.50 at the time of writing. The long exponential moving average (EMA) provides support after ADA marked the upper boundary of the descending channel at the end of the Asian session on Thursday.

The decline is bound to stretch further, especially if the price of Cardano clears the congestions of the buyer at $0.50. As the Relative Strength Index (RSI) forms a bearish divergence below the moving average, the odds will swing in favor of an extended correction.

ADA/USD six-hour chart

Several support areas are lined up to cushion buyers at the confluence formed by the short EMA and the middle boundary of the channel. If the surge materializes, investors should acclimatize to Cardano’s price, exploring lower levels at $0.45 and $0.42, respectively.

Are investors preparing to Sell the news?

Some investors saw early profits as the price of Cardano jumped 14.62% to $0.52. Akash Girimath, an analyst at FXStreet, recently said that ADA is forming a bearish divergence which could lead to an increase in short positions.

The retracement will likely continue until Cardano price finds a solid base, helped by the euphoria surrounding Vasil’s hard fork, which will bring major improvements to the blockchain, and is expected before August. According to Cointelegraph, who quoted TradingShort, the token could plunge by 20%.

“Based on the 1D RSI terms, we also appear to be on the third (3) and final leg below the collapse.”

“So if ADA holders want to avoid this, they need to see the price break above the 1D MA50 and keep trading above it for at least a week. Otherwise, it is possible to achieve a decline of – 93% from high at around 0.200″ TradingShot added.

gimbal price

ADA/USD daily chart

The upcoming Vasil hard fork was originally scheduled to release on June 29, but due to technical issues the launch has been delayed. Cardano has yet to announce another release date; however, the team had mentioned earlier that the hard fork would happen the last week of July.

Richard L. Militello