Cardano: Trader Eyes Potential Relief Rally for ADA

• Cryptocurrency trader Gareth Soloway suggests a potential breakout rally for Cardano token ADA.
• Soloway warns of the possibility of more downsides.
• ADA is forming a long-term wedge bottom, indicating a trend reversal.

A popular cryptocurrency trader is pointing to the potential for a breakout rally in the battered Cardano token ADA. But he cautions that more downsides could still be ahead.

In a recent tweet, trader Gareth Soloway highlighted a bullish chart pattern developing for ADA. The token appears to be forming a long-term wedge bottom, which could signal a trend reversal after a prolonged slump.

“Potential breakout on $ADA out of a long-term wedge,” Soloway tweeted. “Beaten down and due for a bounce.”

Potential breakout on $ADA out of a long-term wedge. Beaten down and due for a bounce. First minor resistance at $0.27, then $0.30. Doesn't mean a bottom is in (we don't know that yet), but should give some short term relief from the bear market. Breakout negated on any daily… pic.twitter.com/HLKeiHqGUL

— Gareth Soloway (@GarethSoloway) October 21, 2023

Cardano is showing signs of life

Cardano’s ADA token has plunged over 90% from its all-time high of $3.10 last year. But according to Soloway, it’s showing signs of life after carving out a falling wedge formation on its chart.

Typically, falling wedges precede upside breakouts and trend reversals. Soloway notes that the first level of resistance sits around $0.27, followed by $0.30.

A break above those levels could trigger a relief rally for the battered token. Short sellers piling in at lower prices could get squeezed out if buy volume ramps up.

However, Soloway cautions that no definitive bottom is in place yet for ADA. The breakdown of the wedge pattern with a daily close below $0.24 would invalidate the bullish setup.