ADA could see a 30% rally with a potential “triple bottom” setup

Cardano (ADA) could rise nearly 30% in the coming days as a classic bullish reversal pattern forms on the chart.

ADA could see a sharp rally

This pattern, known as “three floors,” usually occurs at the end of a downtrend where three consecutive floors are printed at roughly the same level. That is, three lows indicate that sellers are unlikely to drop below a certain level of support on three consecutive attempts, which should pave the way for buyers to return.

In a perfect scenario, a return of buyers to the market allows the altcoin to rebound sharply to a higher high known as a “cutout”, connecting the highs of the two previous rallies. A breakout above this line can move the price by an amount equal to the distance between the bottom and necklines of the pattern.

ADA is currently recovering from the formation of a third bottom, as shown in the graphic below.

ADA / USDT 4-hour chart | Source: TradingView

The timing of the ADA reversal was accompanied by a surge in trading volume, suggesting that this rally has enough buyer support. Hence, ADA appears poised to bounce back to at least $ 1.40.

Furthermore, if the price breaks significantly above the neckline, it will likely continue to rise until it hits $ 1.63 – under the triple bottom scenario.

Accumulation zone

The potential triple bottom scenario comes after ADA fell more than 60% from its record high of $ 3.16 on September 2 this year. This has made ADA one of the worst coins to date, also almost 60% less than its top competitor Ether (ADA / ETH).

The multi-month sell-off pushed the Daily Relative Strength Index (RSI) into oversold territory. The course also shows that ADA appears to have reached a reliable accumulation zone.

Daily ADA / USDT Chart | Source: TradingView

Both the RSI and the consolidation zone favor the bullish outlook for ADA, thus supporting the triple bottom scenario on the 4-hour chart.

Risks at the moment

It’s important to note that ADA is down more than 5.50% in the past 24 hours, in sync with other top cryptocurrencies in the space, with Bitcoin (BTC) down more than 3% and Ether nearly 5% in have fallen in the last 24 hours. same period.

At the center of the steady decline in the crypto markets is the two-day monetary policy meeting of the US Federal Reserve, which begins on Tuesday. During the session, the US Federal Reserve will likely decide to accelerate cuts on its $ 120 billion monthly asset purchase program, one of the key catalysts for the stocks and cryptocurrency market rally starting in March 2020.

In the other part of the meeting, Fed officials discuss the prospect of rate hikes next year. Lending at low interest rates will also play an important role in driving crypto market prices higher in 2020 and 2021, including ADA.

When Fed officials begin their policy session, the ADA could retest weekly support at $ 1.18 before initiating a potential rally. $ 1.18 is the 0.618 Fib level based on the full upward move from the March 2020 low.

Weekly ADA / USDT Chart | Source: TradingView

If ADA does not recover and closes below $ 1.18, the next support could be the 0.786 Fib level near $ 0.674, about 42% lower. However, ADA / USD could also bounce off psychological support at $ 1, which it did from February to July 2021.

You can see the ADA prices here.

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Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.

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