Cardano (ADA) appears to exist heading toward a new record high as its downside move takes the shape of a bull flag.

In detail, the ADA/USD commutation charge per unit plunged sixteen.91% to $2.47, but the pair'south pass up came after a strong movement college, wherein information technology surged over 120% month-to-date to reach an all-time high of $2.97 on Monday. Therefore, the latest declines have given the impression that Cardano is undergoing a brief pause before it resumes its uptrend.

Office of the upside illustration stems from the downwardly sloping channel itself — 2 parallel trendlines enveloping the toll moves. In add-on, the consolidation accompanies falling volumes, indicating a weaker response from traders to pursue the downtrend.

Every bit a upshot, the shape appears similar a balderdash flag, as shown in the nautical chart beneath.

Cardano 4H price chart featuring bull flag setup. Source: TradingView

Typically, bull flags prompt traders to enter the market place at the pattern's bottom or breakout above the upper trendline's high. In doing and so, traders target levels located at a altitude equal to the size of the flag pole — i.e., the height of the uptrend that preceded the bull flag formation.

Cardano'southward flagpole is $0.58-long. Equally a result, ADA/USD'southward bull flag target is $3.05 if measured from the pattern's lesser at $2.47, virtually 23.65% higher.

More than bullish cues come up from the fifty-4H exponential moving average (l-4H EMA; the velvet wave). Traders have shown their intention to hold l-4H EMA as acting support, somewhat validating a breakout move for ADA/USD if information technology manages to float higher up the moving ridge.

The l-4H EMA has been acting as a marketplace entry level since July 21, 2022.

Additional back up confluence for ADA/USD comes from the ascending aqueduct's lower trendline shown in the chart below. The pattern points toward a major cost rebound, with a profit target at its upper trendline.

Cardano price nautical chart featuring ascending aqueduct pattern. Source: TradingView

In doing so, it could have ADA reach its bull flag target midway.

Supportive fundamentals

The bullish technical setups emerged majorly due to euphoria surrounding Cardano's long-awaited smart contracts feature, set to go alive on Sept. 12 via the Alonzo upgrade.

The news boosted hopes that Cardano would be able to rival Ethereum, the biggest smart contracts platform, which has lately struggled with network congestion and college transaction fees. As a result, demand for Cardano's native asset, ADA, has been steadily growing.

In the latest Cardano 360 outcome, its pinnacle executives appear further plans to attract Ethereum blockchain users. Francisco Landino, project managing director at IOHK — the research and development arm behind Cardano — said Cardano would launch the testnet of an ERC-20 migration tool adjacent week.

Related: Cardano Foundation partners with Coinfirm for FATF and 6AMLD compliance

As a result, users volition exist able to transfer their Ethereum standard tokens (ERC-20) to Cardano'south native blockchain. SingularityNET, a decentralized bogus intelligence network, will migrate its native token, AGIX, from Ethereum to Cardano.

During the event, Cardano founder Charles Hoskinson also said that over 100 companies take been planning to move to Cardano in the coming months.

The upside outlook also came amidst concerns over Cardano's efforts to gain legitimacy from financial regulators despite championing itself as a "decentralized public blockchain."

Namely, the Cardano Foundation has partnered with Confirm, a blockchain analytics firm, to boost its compliance efforts to autumn in line with the Financial Action Task Forcefulness's guidelines. Even so, Weiss Crypto Ratings, a rating agency for cryptocurrencies, warned that Cardano'due south decision would make its network "censorship-prone, politicized, and manipulated."

The ADA/USD exchange rate was $2.61 at the time of writing, upwards over 6.v% from its sessional low.

The views and opinions expressed here are solely those of the author and do non necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves adventure, you lot should conduct your own inquiry when making a decision.