Cardano (ADA) Price Could Rise by 70% According to Bullish Indicator
Analyzing Cardano's Bullish Signal | Credit: Derek Fenech
Key Takeaways
- Cardano (ADA) has validated the $0.32 horizontal area as support.
- The weekly RSI created a bullish divergence for the first time in 4 years.
- Will ADA break out from its bullish pattern and increase above $0.60?
The price of Cardano (ADA) has fallen since its yearly high in March. However, it stabilized and regained footing after reaching a temporary bottom in August.
Since then, Cardano’s Relative Strength Index (RSI) indicator has created an interesting bullish signal, which has not been seen since 2020. Can it catalyze a movement like it did back then, or will the increase not materialize this time?
Cardano’s RSI Turns Bullish
The weekly chart shows that ADA has fallen since its yearly high of $0.81 on March 11. The decline culminated with a low of $0.27 on Aug. 5. Then, ADA created a long lower wick and a higher low on Sept. 6 (white icons). Since the downward movement started, this was the first higher low in the weekly time frame.
This entire movement happens above the $0.32 horizontal support area, which has been critical for the Cardano price for nearly two years. Since Nov. 2022, the area has intermittently acted as both support and resistance and seems to have been validated as support in recent months.
Finally, the weekly Cardano RSI is generating a bullish divergence. This is the first time the indicator has generated a bullish divergence in this time frame since March 2020. An RSI movement above 50 would confirm that a bullish trend reversal has started.
Positive Cardano news further supports this possibility. On Sept. 12, on-chain data from IntoTheBlock shows that Cardano has surpassed $6 billion in large transaction volume during the past 24 hours. The indicator measures the amounts transacted by whales and institutional participants.
Will Cardano Break Out?
The daily time frame chart shows two important bullish developments.
Firstly, starting from June 2023, ADA has completed a five-wave increase (white) and a W-X-Y correction. The movements had similar lengths, so the ADA price may have completed its correction.
Secondly, the price has created an inverse head and shoulders, a bullish pattern. If accurate, ADA is completing the right shoulder, after which a breakout is likely.
An increase that travels the entire pattern’s height would take the ADA price to $0.61, reaching the 0.618 Fibonacci retracement resistance level.
If the projected wave count transpires, ADA can go much higher, above the yearly high of $0.81. The $0.61 level is the minimum target if the ADA price breaks out from the inverse head and shoulders pattern.
ADA Breakout Imminent
The weekly and daily ADA time frames both give bullish readings. If that happens, the short-term outlook suggests that the price will break out from its inverse head and shoulders pattern, giving a minimum target of $0.61.
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