Hello and welcome to another update on ADA! Let's explore the latest movements and what they could mean for ADA's future.
Recent Market Movements
ADA has faced a rejection from the 42-cent level, which is not surprising given that it was expected to offer some resistance.
This level was a key target for the internal third wave that I have been tracking and also served as previous structural support and resistance. This 42-cent level was further reinforced by the 1.38 Fibonacci level at 41.7 cents, adding to its significance.
Wave Structure and Patterns
We now have three waves complete in a potential diagonal pattern that may have started around 36 cents, when the price bottomed at the golden ratio level (61.8% retracement) on June 17th-18th. The structure so far includes:
- Wave one to the upside
- Wave two corrective pullback
- Possible third wave rally to the 1.38 extension (41.7 cents)
To confirm a low in place for wave two, we need a five-wave move, even if it's in a diagonal. Without this five-wave move, there's no clear confirmation that wave two has bottomed. The structure must hold above 38.4 cents, the 61.8% retracement of the third wave, to maintain this potential.
Support Levels to Watch
- Primary Micro Support: 38.4 cents
- Next Support Levels: 39.9 cents, 39.1 cents, and 38.4 cents
A direct break below 38.4 cents doesn't invalidate the diagonal but indicates a higher likelihood of further downside. The diagonal pattern would be invalidated with a break below the wave two low at 36.2 cents. However, if the golden ratio level in wave four is broken, it strongly suggests a failure of the diagonal.
Potential Scenarios
If we break below 38.4 cents, we might see another low between 36 and 29 cents. Failure to hold the 29-cent level would be critical, as it would significantly diminish the bullish outlook.
The formal invalidation point for the larger bullish structure is at 22 cents, but breaking below 29 cents makes a wave two correction highly unlikely.
Key Points to Monitor
- Watch for Reversal: Keep an eye on the 38.4-cent support level. A reversal here could indicate the formation of a five-wave pattern.
- Wave Four Formation: Expect wave four to take some time, possibly forming an A-B-C structure. It should take a similar amount of time as wave two (4-5 days).
Conclusion
ADA is currently deep in a support zone, and while a reversal could happen, it’s not confirmed yet. Watch the support levels closely, as breaking below key levels would suggest more downside ahead. If we can see the first five-wave pattern, it will provide a clearer indication of a potential bottom.