The latest rally in the Cardano (ADA<\/a>) market has activated a classic bearish pattern that threatens to lower its prices by as much as 15%.<\/p>\n Dubbed as a\u00a0rising wedge<\/a>, the textbook pattern forms when the price consolidates between upward sloping resistance and support trendlines. Its occurrence typically prompts a bearish reversal, confirmed by a voluminous break below the lower trendline. <\/p>\n The profit target during such a negative move comes to be as below as the maximum wedge height.<\/p>\n ADA\/USD currently ticks all the boxes for forming a falling wedge pattern, as shown in the chart below. The pair now awaits a negative breakdown below its wedge support trendline, which may prompt a correction toward the 50-4H exponential moving average (50-4H EMA; the purple wave) around $2.45.<\/p>\n The said wedge target is a little over 15% below the current ADA\/USD rates (~$2.90).<\/p>\n \u201cOnce the target zone has been reached, it will show if Cardano manages to bounce from there or just sets up for further continuations to the downside,\u201d corroborated Vince Prince, an independent market analyst, in a separate\u00a0report<\/a> based on the same rising wedge pattern.<\/p>\n Prince\u2019s wedge target for the Cardano token was near $2.24.<\/p>\n The downside outlook appeared after Cardano surged by more than 100% quarter-to-date<\/a>, hitting a record high of $2.97 on the Binance exchange on Monday.<\/p>\n Traders raised their bids for ADA\/USD after Cardano creator Charles Hoskinson finalized integrating a long-awaited smart contracts feature<\/a> on the Cardano blockchain via the \u201cAlonzo\u201d upgrade slated for Sept. 12.<\/p>\n The news raised hopes that Cardano would directly rival Ethereum, the biggest smart contracts platform, which has been\u00a0grappling with network congestion and higher fees<\/a>. As a result, demand for Cardano\u2019s native asset, ADA, has been steadily growing.<\/p>\n Now imagine how much $ADA<\/a> would pump if there were actual projects using their smart contracts.<\/p>\n \u2014 Blackbeard (@crypto_blkbeard) August 22, 2021<\/a><\/p>\n<\/blockquote>\n Cryptocurrency market analyst Lark Davis noted<\/a> that if Cardano manages to reach the same market cap as Ether\u2019s, ADA\u2019s price will surge to $10 per token. But he reminded that there were more players in the smart contracts ecosystem waiting to dethrone Ethereum.<\/p>\n \u201cIf it was just Ethereum vs Cardano it would be a much clearer battle of platforms,\u201d Davis tweeted. <\/p>\n \u201cBut we also have BSC, Polygon, Solana, Terra, Avalanche, Zilliqa, Elrond, Polkadot, and many others looking for market share. Many of whom are much further ahead in terms of ecosystem building.\u201d<\/p>\n<\/blockquote>\n The analyst added that ADA\/USD might see a pullback after Cardano\u2019s smart contracts launch, citing the popular \u201cbuy the rumor sell the news\u201d effect. He advised potential ADA buyers to wait for a correction.<\/p>\n At least one technical indicator also pointed toward an imminent correction in the Cardano market. Dubbed as the\u00a0relative strength index<\/a>, the momentum indicator returned a reading above 70, noting that ADA\u2019s current valuation exceeds its demand.<\/p>\n Another catalyst that appeared to have played a key role in sending ADA\/USD rates higher is Bitcoin.<\/p>\n The benchmark cryptocurrency typically acts as a trendsetter<\/a> for rivaling digital assets. When it moves higher, most top altcoins follow suit; similarly, its decline prompts sell-offs across the rest of the crypto market.<\/p>\nBulls eyeing massive ADA adoption<\/h2>\n
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![\"Cardano](\"https:\/\/s3.cointelegraph.com\/uploads\/2021-08\/ee1a84e0-423e-422d-bd6d-57a08228ecb9.png\" "\\"Cardano")
Bitcoin correlation<\/h2>\n
![\"Cardano](\"https:\/\/s3.cointelegraph.com\/uploads\/2021-08\/de1b1797-a814-44bd-a23b-8bcbf0c36753.png\" "\\"Cardano")