For the time being, the only flaw in the bullish scenario is the Federal Reserve’s taper acceleration intentions.
Cardano (ADA) could rise by about 30% in the coming days, indicating the formation of a typical bullish reversal pattern.
The Cardano (ADA) is on the mend
The “triple bottom” pattern is characterized by 3 consecutive lows printed nearly at the same level towards the end of a decline. Meaning, triple bottoms imply sellers’ failure to break below a given support level on three consecutive attempts, allowing buyers to assume control.
In an ideal scenario, the return of buyers to the market allows the instrument to retrace sharply towards a higher level, known as the “neckline,” which connects the previous 2 rebounds’ highs. The move is followed by another breakout, this time causing the price to rise by the same amount as the distance between the bottom and neckline of the pattern.
As demonstrated in the chart below, the Cardano price has been able to paint the triple bottom halfway and is presently rebounding after establishing the third low.
The point at which the ADA price reversed was followed by an increase in trading volume, indicating that the bounce had sufficient support from buyers. As a result, the Cardano coin appears to be on track to at least reach $1.40.
Furthermore, if the price strongly breaks above the neckline level, it will almost certainly continue to rally until it reaches $1.63, as predicted by the triple bottom scenario.
Area of accumulation
The potential triple bottom scenario occurred when ADA’s price dropped more than 60% from its all-time high of $3.16 on Sept. 2 of this year. It also revealed that the Cardano token became one of the worst performers quarter-to-date, falling roughly 45.50 percent versus Ether’s (ETH) 15 percent increase.
The multi-month decline in ADA’s stock has driven its daily relative strength index (RSI), a momentum indicator, into oversold territory. In addendum, as indicated in the chart below, the Cardano token’s price has dropped to what appears to be a reliable “accumulation area.”
Both the RSI and the accumulation area in the ADA market indicate a purchasing scenario, confirming the triple bottom scenario on the four-hour chart.
There are still risks associated with the ADA price
It’s worth noting that ADA has declined more than 5.50 percent in the last 24 hours, about in line with other major crypto assets such as Bitcoin (BTC) and Ether (ETH), which have both plummeted more than 3% and over 5% respectively.
The Federal Reserve’s two-day policy meeting, which began on Tuesday, was at the heart of the crypto market’s consistent slide. The US central bank is expected to decide to speed the tapering of its $120 billion per month asset purchase program, which has been one of the primary triggers for the crypto and stock market boom since March 2020, at the meeting.
Other topics to be discussed at the Fed meeting include the possibility of rate increases next year from the current near-zero levels. Cheaper loans also played a role in driving up the prices of Bitcoin and other altcoins, notably ADA, in 2020 and 2021.
The Cardano coin would be hitting $1.18 as its weekly support for a potential price comeback as Fed officials begin their policy meeting. The 0.618 Fibonacci retracement line of what looks to be an accurate Fibonacci retracement graph in projecting ADA’s support and resistance levels is the $1.18 level.
If ADA fails to recover and closes below $1.18, the next Fib support might be found at the 0.786 Fib line near $0.674, which is 42 percent lower. ADA/USD could, however, reach $1 as psychological support for an early upside retracement, similar to its numerous rallies between February and July 2021.