Already up 65 percent year-to-date, technical charts suggest the rally behind Maker Dao (MKR) may just be getting started.

The world’s 21st largest cryptocurrency by market cap is now trading at an average price of $727 according to CoinMarketCap, but could climb higher than $1100 in the not too distant future pending a successful breakout of a bullish technical pattern known as an ascending triangle.

The cryptocurrency itself has a clear use case to provide utility and governance to MakerDao’s collateralized debt position (CDP) system on the ethereum blockchain, which is responsible for keeping the decentralized stablecoin, DAI, pegged to the USD.

In order to open a CDP and receive DAI in return, the user must lock up a certain amount of ether (ETH). At the time of writing, over 1.5 million ETH are locked up in such contracts, making up nearly 1.4 percent of its entire circulating supply.

MKR/USD Technical Outlook

From a technical perspective, MKR/USD is showing a few promising developments with the most obvious being the formation of a large ascending triangle, a bullish continuation and reversal pattern, after exiting a well-defined downtrend.

In this case, the price of MKR would need to surpass the top of the triangle located at $787 for the bullish move implied by the pattern formation to take effect.

A rule of thumb when estimating the extent of the breakout is to add the base range of the triangle to the breakout point to create a measured move.

This creates a measured move for $1,282, but since a previous resistance level exists just below at $1,184, it would be more conservative to use that obstacle as the initial target.

Indicators such as the Relative Strength Index (RSI), used to measure the speed and magnitude behind price moves, and the Chaikin Money Flow (CMF), used to measure buy and sell pressure, are both in bullish territory, and will stay that way as long as the RSI remains above 50 and the CMF above 0.

Prices rarely fill a pattern all the way to its apex, so a breakout may occur sooner than mid-September when the pattern ends. 

While promising, patterns like this do not perform as intended 100 percent of the time. This setup will become invalid if price finds acceptance below the rising support of the triangle, currently located near $575.

Disclosure: The author holds several cryptocurrencies. Please see his author bio for more information. 

Maker image via Shutterstock; Chart via charts.cointrader.pro

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