Cardano forms a bullish reversal pattern
The Federal Reserve might signal the end of the tightening cycle
A move above $0.35 would trigger more strength
The week ahead is important for the US dollar as the Federal Reserve of the United States announces its interest rate decision on Wednesday. The market unanimously expects the Fed to hold the funds rate at the same level as six weeks ago, the second pause in the current tightening cycle.
However the focus will not be on the actual decision. Instead, it will be on what the Fed will signal that will come next.
More precisely, is the tightening cycle over? Can the Fed declare its fight against inflation over?
Sure enough, inflation has dropped from its highs. Also, it continues to drop.
If one can draw a parallel with Europe, then the Fed should prepare for inflation to drop even further. In Europe, the prices of goods and services have dropped drastically in October. Considering that the Fed and the ECB had similar tightening cycles, one may expect similar inflation trends.
A dovish Fed would spark US dollar weakness and some markets already sniffed it. The cryptocurrency market is one example, where Bitcoin rallied to $35k recently, triggering similar moves in other cryptocurrencies such as Cardano.
ADA/USD bounced from horizontal support – how much can it rally?
One of the cryptocurrencies that anticipates a dovish Fed is Cardano. ADA/USD has rallied from horizontal support and is trying to break dynamic resistance.
Cardano chart by TradingView
Cardano rallied with other cryptocurrencies at the start of the trading year but failed to hold onto its gains. However, it found strong support at $0.25, and then it bounced from the lows.
The market formed a bullish reversal pattern that might represent the end of the bearish market. A move above $0.35 should trigger more strength, while a drop below the 2023 lows would invalidate the bullish reversal pattern.
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