The price of Cardano has increased by about 13% from the low on December 25, and it has now entered the breakout zone within the falling wedge structure. Although ADA has still decreased by nearly 10% this month, this week has not just been a mere rebound.
Currently, there are three signals indicating that the trend may be preparing for a reversal if the price confirms the breakout.
Falling Wedge has shown a reversal signal.
The falling wedge pattern has defined a downward price direction since early November. ADA tested the upper resistance of the wedge near the level of 0.69 USD. If the price closes daily above that line, it will open the opportunity for the price to adjust up by 79%, with the target still at the same level of 0.69 USD. This target is calculated from the vertical distance between the lowest and highest swing that touches the trendline within the wedge before expanding from the breakout point.
This target may be an estimate of ADA’s price if a breakout actually occurs.
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RSI or Relative Strength Index, which measures momentum and identifies whether it is overbought or oversold, also supports this notion.
From December 1 to December 25, ADA made new lows, while RSI made higher lows, which is a bullish divergence showing that the selling side is losing momentum, even though the price is still making new lows.
This divergence has triggered a rebound of 12.8% currently, and if ADA breaks above 0.38 USD, the RSI divergence may shift from a rebound signal to a trend change signal.
Whales are accumulating more, coin activity has decreased.
Whales holding between 100 million and 1 billion ADA have increased their holdings of ADA when the breakout signal appeared. On December 26, they held 3.72 billion ADA, which increased to 3.83 billion ADA, an increase of nearly 41 million USD.
This increase started after the RSI divergence appeared just one day earlier and continued while the price approached the resistance of the wedge, which is a crucial time since whales often accumulate coins before the trend changes, not afterward.
Coin activity, measured by spent coins age band tracking how much supply is moving from old and new wallets on-chain, has rapidly decreased. On December 27, the figure was approximately 149.43 million ADA, which decreased to 116.16 million ADA, a drop of 22%.
The decreasing activity of the coin means that many old coins are not returning to the market, which helps reduce selling pressure. Therefore, when whales increase their purchases while coin activity decreases, it creates conditions that support a breakout, and both signals are consistent with the wedge and RSI patterns that have emerged.
The price of Cardano determines whether USD0.69 is possible or not.
ADA is trading close to 0.38 USD, with a daily closing price above 0.38 USD confirming the breakout of the wedge. If this happens, this pattern will pave the way for ADA to rise towards 0.42 USD. Recovering 0.47 USD is especially important because ADA has previously failed to reach that level on November 17 and again on December 9–10.
If it can recover 0.47 USD, it will signal that the trend pattern has changed, and above 0.51 USD and 0.55 USD, there will be increased momentum, making the movement towards the target of 0.69 USD a real possibility.
If ADA falls below 0.34 USD, the falling wedge pattern will remain, but the chances of a breakout will significantly decrease.
Currently, ADA is facing the most important test in the past month, as the wedge and RSI indicate a trend reversal. Whales are buying, however, coin activity has decreased. Therefore, if there is no confirmed breakout above 0.38 USD and a strong move towards 0.47 USD, these signals cannot be considered a clear trend.
