A developing Cardano ABC pattern has faced several roadblocks, but optimism remains that it will complete, pushing prices to measured targets.
Cardano saw a relief rally from a key support area between $0.24 and $0.26 on Wednesday, pumping an impressive 14% to reach $0.31 before a slight retraction.
Notably, months of price consolidation brought the coin to an area where it bottomed in the previous cycle. It fell briefly to $0.220 on February 6 but has rebounded to hold the $0.24-$0.26 support area.
On lower timeframes, however, Cardano is forming a structure that could drive further price recovery. Despite earlier setbacks, the completion of the sequence now hinges on how it reacts to a crucial price point.
Key Points
- A bullish ABC pattern is forming on the ADA/USDT 4-hour chart.
- Wave A formed when the coin jumped from a low of $0.22 to $0.28 on February 6, while ADA fell to $0.25 on February 11 during the corrective wave B.
- The bullish wave C started immediately from that low but has not yet completed, as the swing high to much higher prices stalled at $0.30 on February 15.
- After an initial failed attempt, Cardano could reload at BC2 and then target wave C completion again.
The ABC Cardano Sequence
Analyst SmellyTaz took to TradingView to identify a bullish ABC formation on the ADA/USDT 4-hour chart. Typically, this structure involves a bullish A wave, a corrective B wave to form a base, and a much larger wave C that targets higher heights.
Wave A formed perfectly when the coin jumped from a low of $0.22 to $0.28 on February 6. A sideways trend ensued, aligning with corrective wave B. During Wave B, ADA fell from that high to the $0.26-$0.24 support, bottoming at $0.25 on February 11.
Meanwhile, the bullish wave C started immediately from that low but has not yet completed. The outcome was supposed to be a swing high to much higher prices, but it stalled at $0.30 on February 15.
What Needs to Happen for Cardano
The rejection from $0.30 saw ADA drop to a BC retracement zone around $0.26 on February 19. This was a macro support area around which buyers stepped in to cushion the price downturn. Cardano consolidated around this area and made another upward move yesterday.
Its peak at $0.31 on Wednesday amid a broader market rebound still fell short of the wave C target. Currently, its price has retraced 6% from its high, suggesting temporary exhaustion of the bull run.
The analyst highlighted that when BC prints but the price still doesn’t reach the wave C target, the market carves out a second support level. The base, also known as the “reload” area, would serve as a cleaner continuation opportunity to complete the wave C sequence.
Notably, this BC2 support lies between $0.27 and $0.28. The market watcher expects Cardano to retest this area, then bounce to complete the ABC pattern.
Confirmations and Invalidation
Furthermore, SmellyTaz called everything beyond this move “noise,” highlighting the BC2 support as an area of interest. If the price does reach this area, a market structure shift (MSS) on lower timeframes or a strong lower price rejection around the support would confirm the reversal momentum.
From here, a clean sweep to the wave C upper band target around $0.38 is most probable. However, the move would be invalidated if the coin drops below BC2. The analysis also calls attention to a rapid spike at the BC2 that could occur without an MSS.
DisClamier: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.