Cardano price has pulled back in the past few days, falling by over 15% from its highest point this month.
Cardano (ADA) retreated to $0.731 on Monday, down more than 15% from its highest level this month. The decline has raised concerns among investors about whether the recent ADA rally has ended.
Cardano price technical analysis points to a rebound
Technical analysis points to a potential rebound in the coming days as the credit rating downgrade jitters ease.
The four-hour chart shows that Cardano has slowly formed two highly bullish patterns. First, the ongoing retreat appears to be part of a falling wedge pattern, which often leads to a bullish breakout.
A falling wedge occurs when two descending and converging trendlines are present, with a breakout typically happening as they near confluence.
This wedge is forming after the coin soared from $0.644 to a high of $0.862 last week. That price action suggests the formation of a bullish pennant, a positive continuation pattern that features a sharp upward move followed by a brief consolidation.
Additionally, although it is premature to predict with certainty, the current pullback appears to be part of the second wave in an Elliott Wave structure. Typically, the second phase is followed by the third, which tends to be the longest and strongest wave.
As a result, Cardano is likely to see a bullish breakout, with the next key level to watch being $0.862, its high from May 12, about 18% above the current price.
Potential catalysts for ADA
There are three potential catalysts that will push Cardano higher in the coming days. First, there are signs that whales are accumulating ADA coins, a sign that they expect its price to bounce back. The chart below shows that whale accounts holding between 10 million and 100 million coins now hold over 12.93 billion coins, up from 11.8 billion in January.
Second, Cardano is gearing for the upcoming NIGHT and DUSK airdrops. NIGHT will be the token for Midnight, an upcoming zero-knowledge scaling network. Cardano hopes Midnight will enhance data protection for transactions and dApps in the network. It also hopes that it will become the top player in Bitcoin (BTC) staking.
Third, odds that the Securities and Exchange Commission will approve Grayscale and Tuttle Capital later this year. Such an approval will lead to more demand for Cardano tokens from Wall Street investors.
