Cardano On the Verge of Breakout for Larger Wave 5 Rally but There’s a Catch

Recent Cardano price development may set the pace for a larger wave five rally past $1, but a breakout must hold to confirm this.

Cardano is recovering like the rest of the market. The 10th-largest cryptocurrency by market cap nears $0.90, a price it last saw almost three weeks ago, mirroring the bullish trends of Bitcoin and Ethereum.

The growing momentum brings Cardano to a crucial level, one that will determine its near-term price action. Notably, a recent market exposition has highlighted the importance of ADA’s current price level and how it would either mark a breakout or extend its corrective phase.

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Cardano Breakout or Extended Wave 4?

Specifically, analyst “Quintn” identified this development in his Thursday TradingView analysis. His chart shows that Cardano has been following a five-wave price pattern dating back to the low of $0.511 in June.

The first wave started after the price bottom, with ADA increasing to $0.594. The corrective second wave followed immediately, taking its price back to $0.536. 

Meanwhile, the bullish third wave began subsequently, pushing the price of Cardano into an ascending channel. The phase ended when ADA reached $1.020 on August 14, with the fourth wave taking its price to a low of $0.782 on September 1.

Notably, the chart shows a parallel descending channel forming from the third wave’s high of $1.02. Cardano has maintained its trend within the wedge until Thursday, when it closed at its tip at $0.894.

The analyst noted that the completion of the fourth wave depends on whether Cardano breaks out of the current channel. According to him, a sustained breakout would put the fifth wave in full swing, while a breakdown could mean an extended corrective fourth wave.

While the token trended above the wedge today, reaching $0.909, it has since retraced to its neckline and has not confirmed a breakout.

Moreover, the analyst noted that the daily RSI stood in overbought territory, suggesting that ADA could see a minor dip before a bullish continuation. At the time of writing, the RSI trades at 58.7, which is below the overbought threshold of 70 and above, confirming there could still be room for growth before a correction.

Cardano Upside Target Upon Breakout

Nonetheless, the commentator shared the targets for Cardano should it break out of the channel. He disclosed that the larger wave 5 targets prices between $1.085 and $1.20. Notably, this aligns with the top of the ascending channel mentioned earlier.

Currently trading at $0.895, a rally to $1.085 and $1.20 would represent 21% and 34% growth, respectively. Meanwhile, after this growth, the market watcher expects a cooldown before the next course of action for Cardano.

Moreover, this price outlook adds to the growing bullish predictions for Cardano. Pundit Lark Davies also recently predicted a rally to $1.20 for Cardano, citing a bullish pennant breakout, while Bitcoinsensus called a slightly higher target of $1.860.