Cardano (ADA) is taking a short pause after a strong surge between July and August, as the altcoin consolidates below its yearly high. While some traders have grown cautious amid the slowdown, market indicators suggest that ADA’s bullish cycle may not be over yet. The current consolidation could, in fact, be a healthy setup before the next leg higher.

At the time of writing, Cardano is trading within a tight range, showing signs of a coiling pattern that often precedes a breakout. Technical indicators on both the 4-hour and daily charts reveal that buying momentum is quietly returning, hinting that bulls may soon attempt to push prices higher again.

Consolidation Pattern Signals Possible Reversal

On the 4-hour chart, ADA has been moving within a falling channel for several days, forming consistent lower highs and lower lows. This pattern generally suggests seller exhaustion, as bearish momentum begins to fade. Cardano’s price is now testing the upper boundary of this descending channel, a move that often precedes a breakout if accompanied by increasing volume.

Adding to the optimism, the Money Flow Index (MFI), a key indicator tracking buying and selling pressure, recently bounced from oversold levels and broke above its descending trendline. This shift signals that buying interest is starting to outweigh selling pressure, potentially paving the way for a move above current resistance.

However, traders should note that the Supertrend indicator remains bearish, with its red line positioned above the price near $0.85. A decisive close above this level would be the first major confirmation of a bullish reversal. If ADA can break and sustain above the Supertrend resistance, the next targets lie at $0.92 and then the psychological $1.00 mark, a level that could attract significant attention across the market.

Technical Patterns Point to Strength

Zooming out to the daily chart, Cardano’s price action is reinforcing the bullish outlook visible on lower timeframes. The formation of a cup and handle pattern, a classic bullish continuation setup is particularly noteworthy.

The “cup” phase represents a gradual rounding bottom, suggesting that sellers have lost strength and buyers are regaining control. The subsequent “handle” indicates a period of mild consolidation before a potential breakout. When the upper boundary of the handle is breached, the pattern often leads to a strong upward move.

This bullish structure is further supported by the Chaikin Money Flow (CMF) indicator, which has recently retested the zero line. A move back into positive territory would confirm renewed capital inflows into ADA, reinforcing accumulation and increasing the probability of a breakout.

If momentum continues to build, ADA could break above its neckline at around $0.92, setting sights on the next target near $1.02, its highest level since the start of the year.

What Could Delay the Breakout?

Despite the encouraging setup, traders should remain cautious. If ADA fails to close above $0.85, the ongoing consolidation could extend for longer than expected. The CMF must hold above zero to validate continued accumulation; otherwise, waning buying pressure could keep the price trapped within a narrow range between $0.77 and $0.82.

Market sentiment around the broader crypto landscape could also influence ADA’s next move. If Bitcoin or Ethereum face renewed volatility, it could temporarily cap Cardano’s upside momentum. Still, the overall technical structure remains intact, suggesting that any dips may attract buyers at lower levels.

Outlook: Bulls Poised for a Return

Cardano’s recent consolidation appears to be a pause rather than a reversal. The combination of bullish indicators, including the MFI breakout, improving CMF readings and the developing cup and handle pattern, point to growing strength beneath the surface.

If ADA can secure a daily close above $0.85, followed by a clean breakout over $0.92, traders may see renewed bullish momentum aiming for the $1.00–$1.02 zone.

While short-term volatility cannot be ruled out, the broader trend remains constructive. Cardano bulls appear to be preparing for another attempt at reclaiming its yearly high and possibly setting a new one before the year ends.