The price of the Lido DAO (LDO) rose on August 3, mainly due to a similar upward move elsewhere in the crypto market and the growing excitement around Ethereum’s network upgrade in September.
On the daily chart, LDO price made a one-day high of $2.40 after trading below $1.84 locally. The bullish reversal amounted to around 30% gains in one day, which suggests a strengthening of the bullish bias for traders on the Lido DAO.
Lido DAO is a liquid staking solution for Ethereum from the total value deposited. In other words, it allows users to participate in Ethereum’s upcoming Proof-of-Stake (PoS) chain of operations in exchange for daily rewards.
Ethereum’s Ether Token (ETH) is up more than 90% since mid-June, as a PoS upgrade to its blockchain called Merge, which is expected in September.
Lido DAO, the largest merge staking service provider, has benefited from the simultaneous craze, with LDO, its governance token, rising nearly 500% over the same period.
Notably, according to DeFi Lama, the total number of Ether in the merged smart contract – also known as ETH 2.0 – through Lido has increased from 3.38 million on June 13 to 4.16 million on August 3.
Charts indicate further LDO price rally
Furthermore, the technicalities of the LDO appear to be upside down due to their “bull flag”. This technical pattern typically appears during an uptrend, when the price has consolidated lower inside a descending channel after a strong upward move.
LDO is forming a similar pattern. On the daily chart, the coin price is reversing after going through a strong uptrend around $2.66 on July 28.
As a result, the Lido DAO token is now breaking out of its current descending channel range, similar to an upward move following the formation of its bull pennant in July.
As a rule, the bull flag’s profit target is equal to the size of the previous uptrend, called the “flagpole”, or $4 as of September, 65% above today’s price.
Bull Flag Failure Scenario
On the other hand, according to research conducted by Samurai Trading Academy, the potential for a bull flag to reach its upside target is around 67%. Therefore, the bull flag of the LDO may fail if its price breaks below the lower trendline of the pattern.
RELATED: ETH Might Consolidate As Merge Enthusiasm Dies, Experts Say
The trendline coincides with a support confluence formed at $1.91‚, which limited the upside moves of the LDO in late July, and the 20-day exponential moving average (20-day EMA; green wave in the chart below) near at $1.80.
Thus, a bear flag breakout, or a break below the support confluence, could keep LDO eyeing the 50-days EMA (red wave) near $1.43 as its downside target.
This level coincides with the 0.236 Fibonacci line near $1.42, which acted as a price floor for February and May.
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