Will the Triple Bottom Pattern Lead to a Trend Reversal for Cardano (ADA)? A Technical Analysis

Will the Triple Bottom Pattern Lead to a Trend Reversal for Cardano (ADA)? A Technical Analysis

Crypto News – Cardano (ADA) has exhibited a notable triple-bottom pattern, typically considered a bullish indicator. However, despite this pattern, ADA has struggled to gain momentum and break out, reverting to pre-breakout levels.

The daily timeframe analysis reveals ADA’s price decline from its yearly peak of $0.46 in April to a low of $0.22 on June 10. Subsequently, Cardano experienced a rebound, validating the $0.24 mark as a substantial support level with a distinctive long lower wick (illustrated by green markers).

Following the rebound, ADA’s price dipped to the $0.24 horizontal support area on two occasions: August 17 and September 11 (marked in green). This established a triple-bottom pattern, typically viewed as a favorable sign.

However, despite the formation of this bullish pattern, ADA’s price failed to manifest an upward trajectory.

Nevertheless, the daily Relative Strength Index (RSI) suggests a potential ADA price surge. Traders commonly use RSI as a momentum gauge to assess market conditions of overbuying or overselling and to make informed decisions regarding asset accumulation or sale.

An RSI reading above 50 during an upward trend favors the bulls, whereas a reading below 50 indicates the opposite.

Notably, the RSI during the triple-bottom pattern demonstrated significant bullish divergence, where momentum increased alongside a decrease in price. This often foreshadows forthcoming bullish trend reversals.

ADA Price Prediction: Short-Term Breakout Can Trigger Reversal

A more detailed analysis of ADA’s movement indicates a breakout from a descending resistance trendline on September 15.

Even though the price failed to surge following the breakout, it is plausible that the price is in the process of confirming the former resistance trendline as a new support, a conventional post-breakout behavior.

Therefore, the most probable ADA price movement in the near future entails an upswing, targeting at least the $0.31 resistance area. This level represents both the 0.5 Fibonacci retracement resistance and a significant horizontal resistance area, standing 22% above the current price.

Reclaiming this level will corroborate the validity of the triple-bottom pattern and affirm the anticipated bullish trend reversal.

However, in contrast to the optimistic ADA price prediction, a drop below the $0.24 horizontal area would nullify both the long-term triple-bottom pattern and the short-term bullish pattern. In such a scenario, a 20% decline to $0.20 becomes a likely outcome.