Cardano Shows Signs of Bottom Formation After Leverage Flush

Market bottoms often emerge from the ashes of panic-driven selloffs, and Cardano ($ADA) may be displaying early signs of such a reversal. After experiencing a significant decline, several technical factors are aligning to suggest the cryptocurrency could be preparing for a rebound from current levels.

Technical Analysis

The recent price action shows Cardano dropping sharply to the $0.82 zone, which represents a critical liquidity area based on historical volume data. This level has attracted substantial trading activity in the past, making it a natural candidate for support. What makes this setup particularly interesting is the behavior of the Relative Strength Index (RSI), which crashed to an extreme oversold reading near 16.69 – a level that markets rarely sustain for extended periods.

More importantly, the RSI has started to curve higher while price remains depressed, creating a bullish divergence pattern. This technical setup frequently precedes meaningful trend reversals, as it suggests underlying buying pressure is beginning to emerge even as prices appear weak on the surface.

Market Structure Context

Key Levels and Outlook

• Support Zone: The $0.80–$0.82 area remains the immediate critical support level
• Recovery Target: A bounce toward $0.85–$0.88 becomes possible if buying interest materializes
• Momentum Indicator: The RSI's upward turn adds credibility to the reversal scenario

While short-term technical signals point toward a potential rebound, broader market conditions will ultimately determine whether ADA's recovery has staying power. Bitcoin's overall trend and macroeconomic factors will play crucial roles in shaping the sustainability of any rally.

Should Cardano successfully defend its current support zone and reclaim resistance levels above $0.88, a more substantial rally could unfold. However, failure to maintain these levels could expose the next support zone around $0.75.