Cardano (ADA) Has Broken Out of a Falling Wedge Pattern, Signaling a Bullish Reversal

Crypto traders often use technical patterns to identify potential reversals in the market. One such pattern is the falling wedge, which can signal a bullish breakout and further upside for the cryptocurrency.

In the case of Cardano (ADA), the daily chart reveals that the token has indeed broken out of a falling wedge pattern. This pattern began to form in early March, with converging trendlines defining the wedge structure. Each trendline displayed lower highs and lower lows, which is typical for a falling wedge.

The lower trendline connected the March 6 low at $0.3917 and the March 30 low at $0.24. Meanwhile, the upper trendline passed through the March 14 high at $0.5111 and the April 10 high at $0.4. A breakout was expected when price broke above the upper trendline of the wedge.

Chart: Benzinga Pro

This breakout finally occurred on April 23. After bouncing off the wedge support, ADA broke through the upper trendline and closed higher, also pushing through the 50-day Exponential Moving Average (EMA), currently at $0.6886. This move added more weight to the bullish signal.

At the breakout, ADA traded in the range of $0.61 to $0.62, and by April 29, it reached $0.7129, showing an increase of over 14%. The trading volume also surged to 7.83 million, which is significant and supports the breakout with strong buying interest.

The Relative Strength Index (RSI) currently reads 59.26. It remains above the neutral 50 mark, which indicates bullish momentum, but it’s still below the overbought zone at 70, leaving room for further price movement.

Typically, the target for a falling wedge breakout is calculated by measuring the height of the wedge and projecting it from the breakout point. In ADA’s case, this projection provides a target near $1.1606, which is about a 63% gain from the current price.

However, this target will only be reached if ADA manages to stay above the 50-day EMA and the broken wedge resistance line. A drop below the EMA at $0.6886 could negate the bullish structure and signal a continuation of the downtrend.

On the other hand, the BBTrend indicator, which tracks the strength of price trends through Bollinger Bands, has dropped sharply. On April 26, the reading was 13.27, but by April 29, it fell to 7.55.

This decline shows that the recent uptrend in ADA is losing force, even though the token has closed in green for four straight days. Typically, a rising BBTrend means strong momentum with expanding volatility, while a falling BBTrend signals slowing price movement or the beginning of a consolidation phase.

ADA’s current BBTrend still shows positive momentum, but it’s clearly weaker than earlier in the week. If this decline continues, Cardano may enter a sideways phase. However, if buying interest returns, the price could push higher and extend its recent gains.

The Directional Movement Index (DMI) provides further evidence of fading momentum. The ADX (Average Directional Index), which measures trend strength without direction, dropped from 31 to 17.14 in just two days. Values below 20 often suggest weak trends or the start of a consolidation period.

At the same time, the +DI (positive directional indicator) rose slightly to 19.95, up from 15.96 a few hours earlier, but still below the 26 mark from two days ago. The -DI (negative directional indicator) currently stands at 19.07, also showing mixed movement—down from 21.16 recently but up compared to 14.49 earlier.

These close readings between the +DI and -DI indicate market indecision. Neither bulls nor bears currently hold strong control, which suggests Cardano might trade sideways unless a clear trend forms soon.