The price of LDO is up about 30% over the last day and has gained about 500% since mid-June.

Lido DAO (LDO) price surged on Aug. 3, mainly due to similar bullish moves in other cryptocurrency markets and growing euphoria over the Ethereum network upgrade in September.

On the daily chart, the day after the local drop to $1.84, LDO’s price hit an intraday high of $2.40. The sharp reversal to the upside amounted to nearly 30% gain for the day, indicating an increase in traders’ bullish sentiment on Lido DAO.

Daily LDO/USD chart. Source: Trade View
Lido DAO is a liquid Ethereum bulk deposit staking solution. In other words, it allows users to participate in the future Ethereum Proof-of-Stake (PoS) chain in exchange for daily rewards.

The Ethereum (ETH) token is up over 90% since mid-June, partly due to hype surrounding its blockchain PoS upgrade called Merge, which is expected in September.

Lido DAO, the largest merger staking service provider, has also benefited from the excitement, with its LDO governance token up almost 500% over the same period.

Notably, the total amount of Ether staked in the Merge smart contract, also known as ETH 2.0, via Lido increased from 3.38 million on June 13 to 4.16 million on August 3, according to data from DeFi Llama.

All ETH is deposited into the Ethereum merge contract via Lido DAO. Source: DeFi Llama
The charts are pointing to an impending rally in LDO price
Additionally, LDO techniques appear to be skewed to the upside due to the bull flag. This technical pattern usually occurs during an uptrend when the price is consolidating to the downside within a downtrend channel after a strong upward move.

LDO forms a similar pattern. On the daily chart, the token’s price reversed after a strong uptrend that reached around $2.66 on July 28th.

Daily LDO/USD bullish flag setup. Source: Trade View
As a result, the Lido DAO token is now seeing a breakout above its current descending channel range, similar to the bullish move that followed July’s bullish pennant pattern.

Typically, the bull flag profit target is the size of the previous uptrend, known as the “flagpole,” or $4 by September, which is 65% above the August 3 price.

Bull flag rejection scenario
On the other hand, according to a study by Samurai Trading Academy, there is about a 67% chance of a bull flag hitting its upper target. Therefore, a bullish LDO flag could fail if its price falls below the pattern’s lower trendline.

Connected: ETH could consolidate as merger enthusiasm dies down, expert says

The trendline coincides with the confluence of the $1.91 support that capped the LDO’s upside in late July and the 20-day exponential moving average (20-day EMA; green wave in chart below) at around $1.80.

Daily LDO/USD chart. Source: Trade View
Therefore, a break of the bear flag or below the support confluence could force the LDO to consider the 50-day EMA (red wave) near $1.43 as a downside target.

This level coincides with the 0.236 Fibonacci line near $1.42, which served as the price floor in February and May.

The views and opinions expressed herein are solely those of the author and do not necessarily reflect those of Cointelegraph.com. Every step of investing and trading involves risk, you should do your own research when making a decision.

Source: CoinTelegraph

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