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$ADA retreated to $0.731 on Monday, down more than 15% from its highest level this month. The decline has raised concerns among investors about whether the recent $ADA rally has ended.

Technical analysis points to a potential rebound in the coming days as the credit rating downgrade jitters ease.

The four-hour chart shows that Cardano has slowly formed two highly bullish patterns. First, the ongoing retreat appears to be part of a falling wedge pattern, which often leads to a bullish breakout.

A falling wedge occurs when two descending and converging trendlines are present, with a breakout typically happening as they near confluence.

This wedge is forming after the coin soared from $0.644 to a high of $0.862 last week. That price action suggests the formation of a bullish pennant, a positive continuation pattern that features a sharp upward move followed by a brief consolidation.

Additionally, although it is premature to predict with certainty, the current pullback appears to be part of the second wave in an Elliott Wave structure. Typically, the second phase is followed by the third, which tends to be the longest and strongest wave.

As a result, $ADA is likely to see a bullish breakout, with the next key level to watch being $0.862, its high from May 12, about 18% above the current price.