Cardano (ADA) is attempting a short-term trend reversal after completing a corrective decline. Experienced trader Matthew Dixon said ADA has printed a transparent bullish divergence, indicating that selling pressure has eased.
Five-wave move confirms ADA reversal attempt. Volume also supports the move
Source: X
In a post on He described the signal as one in every of the few bullish setups visible in an otherwise slow market.
On the 1-hour chart, ADA made a cheaper price low earlier this week. At the identical time, the Relative Strength Index (RSI) made the next low. This mismatch between price and momentum is known as bullish divergence. Traders often interpret this as an indication that the bears are losing control.
After the divergence, ADA rebounded strongly from below $0.36 to close $0.39, confirming the signal before the consolidation began.
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Five-wave movement confirms ADA reversal attempt
Dixon later said that ADA made a transparent five-wave uptrend after the correction. In Elliott Wave evaluation, a five-wave structure often marks the beginning of a brand new trend fairly than a short lived upswing.
He added that if ADA continues to respect key support levels, the structure supports the case for an additional five-wave increase on shorter time frames.
At the time of writing, ADA is trading near $0.37 after recovering from the $0.38-$0.39 range. The pullback has up to now held near the 0.618 Fibonacci retracement level, an area that zone traders often watch because the trend continues.
ADA/USD 1-hour price chart. Source: TradingView
The TradingView chart also shows ADA breaking out of a descending channel before retesting previous resistance. This area now serves as short-term support.
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Volume also supports the move
Trading volume increased in the course of the initial breakout from the corrective structure, suggesting buyer involvement fairly than a light recovery. During the decline, volume cooled, a pattern that traders often associate with consolidation fairly than re-selling.
This behavior supports the view that the move inside a developing uptrend stays corrective and doesn’t represent a whole reversal back to the downside.
The bullish setup stays valid so long as ADA stays above the $0.36-$0.37 support zone. A sustained break below this area would weaken the structure and shift the main focus back to downside risk.
On the opposite hand, traders are watching to see if ADA can reclaim the $0.38-$0.39 area with volume. A transparent break above this area would strengthen the case for a continuation towards higher resistance levels.
The current structure develops on shorter time frames and shows short-term momentum fairly than a confirmed long-term trend reversal.
