- Cardano price is forming a rising wedge pattern, hinting at a 16% drop.
- The pullback might be cut short due to the demand zone, extending from $1.488 to $1.566.
- A decisive 4-hour candlestick close above $1.852 will invalidate the bearish outlook.
Cardano price shows the formation of a setup that hints at a breakdown. The resistance level present above the current position adds credence to this drop.
Cardano price on the verge of a downswing
Cardano price has been setting up higher highs and higher lows since May 28. A rising wedge pattern appears to form when these swing points are connected using trend lines. Such a converging price action for ADA tends to result in a violent drop after a decisive close below the lower trend.
As such, the technical formation forecasts a 16% downswing, obtained by measuring the distance between the first swing high and low. Adding this measure to the breakout point at $1.725 move places Cardano price at $1.448.
While a 16% correction seems plausible from a theoretical perspective, the presence of the demand zone, ranging from $1.488 to $1.566, might stunt this drop.
Hence, investors can expect a 10% drop to $1.566 or a sweep into this zone. Only in extremely bearish scenarios, ADA price might break below the said support area and head toward the theoretical target point at $1.448
ADA/USD 4-hour chart
While the bearish descent seems to be fixed due to a rising wedge, investors should note that this pattern is formed on an uptrend. Therefore, a sudden spike in potential buying pressure could tilt the odds in the bulls’ favor.
The stiff resistance level at $1.833 has prevented Cardano price from moving higher for nearly two weeks. Hence, a decisive close above $1.852 will invalidate the bearish narrative detailed above and kick-start a bullish outlook.
In this case, ADA price might rally 10% to tag the resistance level at $2.037.
