Will the Cardano (ADA) Cup and Handle Pattern Trigger an Upswing?

Understanding the Cardano (ADA) Cup and Handle Pattern

Cardano (ADA) has been in a downtrend since March, forming lower highs and lower lows. Amidst broader market corrections in August, it also lost its position in the top 10 cryptocurrencies by market capitalization. At press time, ADA was trading at $0.361, having experienced a slight increase of 2.55% over the past 30 days, mitigating its year-to-date (YTD) losses to 39.09%.

Recent Developments Supporting the Pattern

Despite being a challenging year, Cardano's smart contract capabilities have notably improved, increasing from 8,083 Plutus scripts to 91,470. While this is a positive development, its immediate impact on price action may be limited. However, recent technical analysis indicates a potential upswing for ADA.

Analyzing the Cup and Handle Pattern

Beginning on October 15, Cardano entered a Cup and Handle chart pattern, as highlighted by trader Willmangalus on TradingView. The pattern reveals an even cup, with declining volume at the cup's base, and a handle retracement not deep enough to negate the pattern.

• Volume Trends: Rising volume during the handle portion adds legitimacy to the formation.
• Validity Concerns: The chart pattern has formed over just a week, while typical formations require at least 6 or 7 weeks.

Price Target Insights

Willmangalus projects a stop loss at $0.338 and a take profit target at $0.394, indicating a potential profit of 9.14%, while a stop loss would mean a 6.37% loss. Other analysts, like TradingShot, suggest that a bullish cross could push ADA as high as $5 in the long term.

As the situation unfolds, the market eagerly anticipates whether this chart pattern will manifest into a bullish trend.