ADA, AVAX and FLOKI – Three Altcoins Show Bullish Divergences, Could Trigger Price Rallies
How Will ADA, AVAX And FLOKI React | Credit: Hameem Sarwar
Key Takeaways
- Cardano (ADA) has tried to break out from a descending resistance trend line four times.
- Avalanche (AVAX) has made five attempts at breaking out from its own descending resistance trend line.
- FLOKI has broken down from a long-term parallel channel but bounced at horizontal support.
Bullish divergences are signals that mark market bottoms. They get especially significant when they occur at important horizontal support levels or if combined with a reclaim. Additionally, they get stronger if they are present in more than one indicator.
ADA, AVAX, and FLOKI are three altcoins that have generated significant bullish divergences. Will they play out, and what type of increases will they lead to if they do?
ADA Price Attempts Another Breakout
The ADA price has decreased under a descending resistance trend line since reaching its yearly high of $0.80 in March. The decline led to a low of $0.31 on July 5. While the decrease seemingly caused a breakdown from the $0.36 horizontal area, ADA bounced and reclaimed it shortly afterward.
On July 12, the ADA price made its fourth attempt at breaking out from a trend line which existed for 130 days.
A bullish divergence in both the RSI and the MACD (green) preceded the ongoing upward movement. Since the divergence is present in both indicators and coincides with a reclaim of an important horizontal area, it is considered a very strong signal. Additionally, there is a longer-term divergence developing in the RSI (dashed).
If a breakout happens, the Cardano price can increase to the 0.5 Fibonacci retracement resistance at $0.56.
Conversely, a rejection from the trend line and a close below $0.36 will invalidate the signal. In that case, the price of ADA could fall to $0.25. Currently, there are no signs suggesting this is likely to happen.
Can AVAX Reclaim Horizontal and Diagonal Support?
Similarly to ADA, the AVAX price has fallen under a descending resistance trend line since its yearly high in March. So far, it has made five unsuccessful breakout attempts (red icons). The descending resistance trend line coincides with the $28.50 horizontal resistance area.
Similarly to ADA, the daily time frame RSI and MACD have both generated bullish divergences (green). While there is a longer-term bullish divergence that has developed in the MACD, compared to ADA, the bullish divergence signal is weaker because it has not occurred at a horizontal support area and is not combined with a reclaim.
If the AVAX price breaks out, it can increase to the next resistance at $41.50. If that does not happen, the next support is at $19.
Can FLOKI Reclaim Long-Term Pattern?
The final altcoin that has generated a bullish divergence is FLOKI. While the divergence presented itself at the $0.000128 horizontal support area, it occurred after a breakdown from an ascending parallel channel. So, the FLOKI price has to reclaim this channel to invalidate the previous breakdown.
Additionally, the bullish divergence is weaker than the other two. As well as not being associated with a reclaim, the MACD divergence is only visible in the short-term, rather than in both the short- and long-term, which is the case for AVAX and ADA.
However, the positive reading for FLOKI comes from its wave count, which shows a completed A-B-C correction where waves A: C had an exactly 1:1 ratio. So, if FLOKI reclaims the channel’s support trend line, it can increase to its midline at $0.000270. Conversely, a rejection from the support can lead to a drop to the next horizontal support level at $0.000056.
Bullish Divergence Signals Are Different For Each Altcoin
ADA, FLOKI, and AVAX have generated bullish signals, which differ in strength. ADA has the most bullish setup, followed by AVAX and then FLOKI. In any case, all three need to break out to confirm their bullish trend reversals.
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