Cardano (ADA) is attempting a short-term trend reversal after completing a corrective decline. Veteran trader Matthew Dixon said ADA has printed a clear bullish divergence, signaling that selling pressure has weakened.
In a post on X, Dixon said ADA appears to have finished its correction and is starting an impulsive move higher. He described the signal as one of the few bullish setups visible in an otherwise slow market.
On the 1-hour chart, ADA made a lower price low earlier this week. At the same time, the Relative Strength Index (RSI) formed a higher low. This mismatch between price and momentum is known as bullish divergence. Traders often read it as a sign that bears are losing control.
Following the divergence, ADA rallied sharply from below $0.36 to near $0.39, confirming the signal before entering consolidation.
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Five-Wave Move Confirms ADA Reversal Attempt
Dixon later said ADA completed a clean five-wave move higher after the correction. In Elliott Wave analysis, a five-wave structure often marks the start of a new trend rather than a temporary bounce.
He added that if ADA continues to respect key support levels, the structure supports the case for another five-wave advance on lower time frames.
At the time of writing, ADA trades near $0.37 after pulling back from the $0.38–$0.39 range. The pullback has so far held near the 0.618 Fibonacci retracement level, a zone traders frequently watch during trend continuation.
The TradingView chart also shows ADA breaking out of a descending channel before retesting former resistance. That area is now acting as short-term support.
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Volume Also Supports the Move
Trading volume increased during the initial breakout from the corrective structure, indicating participation from buyers rather than a thin rebound. Volume cooled during the pullback, a pattern traders often associate with consolidation instead of renewed selling.
This behavior supports the view that the move remains corrective within a developing uptrend, not a full reversal back to the downside.
The bullish setup remains valid as long as ADA holds above the $0.36–$0.37 support zone. A sustained break below that area would weaken the structure and shift focus back to downside risk.
On the upside, traders are watching whether ADA can reclaim the $0.38–$0.39 region with volume. A clean break above that range would strengthen the case for continuation toward higher resistance levels.
The current structure is developing on lower time frames and shows short-term momentum rather than a confirmed long-term trend reversal.
