For those of you who follow my videos and articles, the Cardano analysis won’t be much different from the one we reviewed last week – but the new ones (welcome!) Here, I’ll do it quickly! The highlighted zone (No. 1) represents a narrow trading range that Cardano has been in for fifteen days. Cardano stays within the boundaries of the bullish pennant trend lines. Look for a decline on the short side of the market and close below the black trendline near the 1.09 to 1.10 range. If Cardano tries to re-enter above the black trendline or bullish pennant but doesn’t come back on retesting, a brief opportunity may arise. There are three entry options for bulls – each more conservative than the other. First, an entry could be made when we get a daily close above the daily Tenkan-Sen at 1.255. Second, an entry could be made in the first pause or above the bullish pennant around the value range of 1.49 (# 2). Third, and most conservative, would be to wait for a break above the pennant and then wait for the breakout to retest to confirm support and then enter the market if the support holds (# 3). The third entry option would be the same range of values as # 2.
Litecoin broke its bullish pennant on April 5th, rose higher and retested the break on April 7th as a support. Yesterday’s daily candlestick has created an indoor bar. Last week I talked about waiting for an end to above the previous swing high at 231 – which is what we got. I’m looking at the same range of values for a new entry, especially if a closing price above 230.00. The delay range is slightly below what it takes for all conditions to be bullish on Litecoin’s Ichimoku daily chart. Hence, I would wait for the daily close to confirm that the lag range closes above the candles. However, upside potential may be limited due to a strong harmonic pattern known as the Bearish Deep Crab that completes around the range of 255-259. We could see an immediate reversal and massive selling pressure if Litecoin hits this level.
There are a couple of levels in Polkadot’s diagram that I think we should look out for. On the daily chart above, the price is currently trading in relation to the regression trend channel (red and blue channels). You will find that DOT pushed across the channel and retested the breakout as support. However, we haven’t seen a ton of follow-up since yesterday’s close. For those interested in short selling, I would be careful using the daily chart. While a return to the channel presents a bearish situation for a bull trap, we could see a nice bear trap develop when traders decide to sell below the channel. The highlighted price level in first place shows a double level of support. The March 24-25 lows share the same support zone as the greatest support / resistance level in the Ichimoku system, Senkou Span B. One could easily see bears aggressively shorting the break below the channel only to see that buyers continued downward pressure. But any clear break under Senkou Span A would be catastrophic for the Bulls. If the price falls to the support zone at # 1 (27-29) and continues to fall below Senkou Span A, it means that the price has fallen below the cloud and the lagging span is below the candlesticks. This would produce the strongest bearish signal Polkadot has ever seen on its daily chart. But what about the weekly chart?
Polkadot’s weekly chart is so new that there isn’t enough data to draw Senkou Span A! Note the red arrow on the candle cart along with the red arrows on the RSI (# 1) and the compound index (# 2). When you see price action making higher highs but the RSI and / or the composite index making lower highs, it is a condition known as bearish divergence – a warning sign that further upside may end. There are several conditions in the oscillators to watch out for over the coming weeks.
1. The first condition to observe is the RSI (# 1). I drew a trend line that shows where the support level is on the RSI. If the RSI falls below this trendline, a flash crash is likely to occur. BUT! Only if the next two conditions are also met.
2. The second condition concerns the composite index (No. 2). The lowest value on the weekly chart for the composite index is 48. If the composite index falls below this level (and conditions one and three are met), a crash is to be expected.
3. Finally, the third condition to observe is% B. If% B falls below 0.8, watch out for it. The percentage B that falls below 0.8 is the likely trigger event where the RSI and composite index fall below their values and cause a massive crash.
The price development of Polkadot will be interesting in the next few weeks. Depending on how fast Polkadot was going to fall, we could see a hidden bullish divergence setup on the weekly chart indicating support and a resumption of the rise – but this would only happen after Polkadot dropped from -35% to -45 % down was recent all-time high.