ADA price sees 30% rally with potential 'triple bottom' setup

Cardano ( ADA ) could recover by nearly 30% in the coming days, as this portends the formation of a classic bullish reversal pattern. St...


Cardano (ADA) could recover by nearly 30% in the coming days, as this portends the formation of a classic bullish reversal pattern.

Strong ADA rebound underway

Nicknamed “triple bottom“The pattern usually occurs at the end of a downtrend and consists of three consecutive lows printed at roughly the same level. This means that triple dips indicate the inability of sellers to break through a specific support level during three consecutive attempts, which ultimately paves the way for buyers to take over.

In a perfect scenario, the return of buyers to the market allows the instrument to return sharply to a higher level, called a “neckline”, which connects the highs of the two previous rebounds. The move follows with another breakout, this time pushing the price up by as much as the distance between the bottom of the pattern and the neck line.

So far the ADA award was able to paint the triple bottom halfway down, now rebounding after forming the third low, as seen in the graphic below.

Four hour ADA / USD price chart with triple bottom setup. Source: TradingView

The point at which the ADA price reversed was accompanied by an increase in trade volume, suggesting that the rebound was sufficiently supported by buyers. Therefore, the Cardano Token looks set to continue at least one run towards $ 1.40.

Additionally, if price still breaks decisively above the neckline level, it will likely continue to rally until it hits $ 1.63, under the triple bottom scenario.

Accumulation zone

Potential triple bottom scenario appeared after ADA’s award dived more than 60% from its record high of $ 3.16 reached on September 2 earlier this year. It also surfaced as the Cardano token became one of the worst performers of the quarter to date, falling almost 45.50% from its main rival Ether (ETH) 15% of earnings.

The massive multi-month sell-off of ADA pushed its daily Relative Strength Index (RSI), a momentum indicator, into oversold territory. Additionally, the drop in the price of the Cardano token has also led it to what appears to be a “accumulation zone“, as shown in the table below.

ADA / USD daily price chart with accumulation zone and oversold RSI. Source: TradingView

The RSI and the accumulation zone also indicate a buy scenario in the ADA market, thus supporting the triple dip scenario on the four hour chart.

Risks remain for the ADA price

Importantly, the ADA has fallen over 5.50% in the past 24 hours, which is very in sync with the other major crypto assets in the space, along with Bitcoin (BTC) decreasing by more than 3% and Ether by almost 5% during the same period.

At the heart of the crypto market’s uniform decline was the Federal Reserve’s two-day policy meeting starting Tuesday. During the meeting, the American central bank would probably decide to accelerate the reduction of its asset purchase program by $ 120 billion per month, one of the main catalysts of the crypto and stock market rally since March 2020.

Other parts of the Fed meeting would see officials discussing prospects for rate hikes next year from current near zero levels. Cheaper loans have also played an important role in the Bitcoin surge and altcoin market prices are higher in 2020 and 2021, including ADA.

Related: Bitcoin price drop could end on Wednesday as Bitfinex offers hint at Fed plans to buy the news

As Fed officials begin their policy meeting, the Cardano token would test $ 1.18 as weekly support for a potential price rebound. The $ 1.18 level is the 0.618 Fib line of what appears to be an accurate Fibonacci retracement chart to predict ADA support and resistance levels.

ADA / USD weekly price table. Source: TradingView.com

If ADA fails to rebound and close below $ 1.18, its next Fib support could be at 0.786 Fib line near $ 0.674, or around 42% below. Nonetheless, the ADA / USD may also test $ 1 as psychological support for an early bullish retracement, similar to its multiple rebounds between February and July 2021.

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