ADA price – Bitcoin (BTC/USD) And Cardano (ADA/USD)

Cardano (ADA)

Above: Cardano chart (ADA/USD)

Cardano still accounts for my largest holding in my cryptocurrency portfolio. That being said, I still want to short it here in the short term (no pun intended). Cardano is very, very close to tagging the coveted $1.00 level, but it’s finding a lot of resistance against the Fibonacci cluster we discussed yesterday. I’ve made the oscillators bigger to go over why I am looking for short entries here. Cardano’s RSI level is the highest its ever been on the weekly chart: 93.05. That doesn’t mean there is an imminent collapse, but it does indicate expected near term weakness. The Composite Index is the key player here (just below the RSI). The Composite Index has printed a lower high while the RSI and price action have both printed higher highs. This creates what is known as bearish divergence. Divergences are a kind of warning sign and essentially turn lagging indicators into leading indicators. Using logarithmic measurements, I can easily see Cardano dropping to the 78.6% Fibonacci retracement at 0.5366. From there, the next level down is the 50% retracement at 0.32, which seems low but is well within the bounds of a normal pullback. I’d look at a short below the 0.93 level and cover before 0.70. Buy Limit orders at 0.53 and 0.32.

Bitcoin (BTC)

Bitcoin is just a hair’s breadth from touching $50k. I wouldn’t be surprised to see it spike to $70k, but I also see a more likely pullback. The pullback will more than likely occur during low participation, low liquidity period – something like a weekend or a holiday – or both. The upcoming weekend is also a holiday weekend in the US, with Monday (February 15) a Federal holiday (President’s Day). It would be a perfect opportunity to see Bitcoin experience a flash crash lower. The two levels I am looking at are 23,986 (38.2% Fibonacci retracement) and 19,218.77 (50% Fibonacci retracement). Those reading who are familiar with Fibonacci retracements and how they are drawn may be wondering why I have drawn the levels as I have done. I am drawing them using the same way that Connie Brown instructed in her book, Technical Analysis for the Trading Professional (required reading for the CMT certification). Notice that neither the 38.2% nor the 50% levels coincide with any Ichimoku levels, which is good. When Bitcoin corrects from new highs, flash crashes often exceed normal and observable support levels. I am looking at 23,986 and 19,218.77 as levels to place a few buy limit orders. I don’t want to commit a significant portion of my free capital. Still, I want to put 10% of my available capital at both of these levels because getting an entry on a flash crash is one of the most profitable outcomes available in the cryptocurrency trading space. I will look at some short trade ideas tomorrow as we transition into the weekend.

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