- Cardano (ADA/USD) is completing a Wave 2 retracement, with a potential breakout above $0.73 signaling the start of a bullish Wave 3.
- Traders should watch for confirmation and manage risk with stop-losses below $0.64.
Cardano (ADA/USD) appears to be carving out a classic Elliott Wave structure, currently positioned in a corrective Wave 2 phase that could set the stage for a powerful rally. Based on technical analysis, ADA is retracing from recent highs and is now testing key Fibonacci levels that typically precede a bullish impulse wave.
According to the Elliott Wave principle, Wave 2 often retraces between 38.2% to 61.8% of Wave 1’s move — aligning perfectly with the current market behavior. At press time, ADA is trading in the mid-$0.60s, with a potential bottom forming near the 0.618 Fibonacci level. Should this support hold, the next move could be a rally into Wave 3, historically the strongest and longest wave in a five-wave motive sequence.
Also read: XRP Lawsuit Update: Ripple CLO Explains
The critical breakout level to watch is $0.73. A strong move above this resistance zone, ideally backed by increased volume and momentum indicators turning bullish, would likely confirm the beginning of Wave 3. Analysts anticipate that this breakout could push ADA/USD beyond the $1.00 mark in the coming weeks if the pattern holds.
However, traders should proceed with caution. The wave count would be invalidated if the price drops below $0.640, making this a key level for stop-loss placement. For swing traders looking to capitalize on this setup, the recommended strategy is to wait for a confirmed breakout above $0.73, ideally accompanied by a bullish reversal signal or candle pattern before entering a long position.
Risk management remains crucial: place stop-loss orders just below $0.64 to limit downside exposure in case the bullish wave count fails. If cardano holds the retracement zone and breaks out convincingly, traders may be witnessing the early stages of a new bullish leg.
As always, combine technical insights with broader market sentiment and news to make well-informed trading decisions. Wave 3 may be approaching — the question now is whether ADA will ride it to new highs.
