Cardano price has sold off in the past few months, mirroring the performance of the broader crypto market.
Summary
- Cardano price has formed a giant falling wedge chart pattern.
- The token has also formed a bullish divergence pattern on the daily chart.
- It may rebound soon as the Midnight Network launch nears.
Cardano (ADA) token dropped to a low of $0.3895 this month, down 58% from its year-to-date high, shedding billions of dollars in value.
Cardano price technicals point to a rebound
The daily timeframe chart shows that ADA price has slowly formed a highly bullish chart pattern, which may lead to more upside in the coming days or weeks.
It has been forming a falling wedge pattern, a pattern composed of two descending, converging trendlines. A bullish breakout typically happens when these two trendlines are about to converge, which is happening now.
Oscillators also point to a near-term rebound. The Relative Strength Index has moved from the oversold level at 23 to 40.
Also, the two lines of the Percentage Price Oscillator, a unique form of the MACD indicator, have formed a bullish crossover. This pattern’s histogram is about to cross the zero line.
Therefore, the combination of a falling wedge and bullish oscillators suggests a brief rebound in the coming days or weeks. That rebound will see it retest the critical resistance level at $0.5097, the lowest swing on June 22.
However, a drop below this month’s low of $0.3895 will invalidate the bullish Cardano price forecast.
Midnight Network launch could be the catalyst
The most likely catalyst that will boost Cardano price will be the upcoming Midnight Network launch.
Midnight is an upcoming sidechain on Cardano’s network that uses zero-knowledge technology, widely known for its security and privacy.
In multiple posts, Charles Hoskinson has touted Midnight as the platform that will solve most of the key challenges that affect Cardano today.
For example, he believes that it will introduce more developers and users, a move that will bring in millions of dollars in total value locked to the Cardano ecosystem.
Hoskinson also expects that Midnight will dramatically increase the number of transactions and active users to the network and help secure partnerships with companies that have resisted deals with Cardano in the past.
The upcoming Midnight and NIGHT token launch will also benefit Cardano directly because of the Glacier airdrop that allowed its users to claim the tokens.
Still, the main concern is what will happen to Cardano months after Midnight launches, as developers will likely opt for the new network at the expense of the original chain.
