Cardano (ADA) has formed a bullish divergence in the relative strength index (RSI) on the daily chart, signaling that downward pressure is easing.

On July 8 (local time), blockchain media outlet The Crypto Basic reported that ADA traded at $0.16697, down 4.19 percent on the day. It said technical indicators showed selling momentum slowing.

The key is the divergent moves in price and RSI. ADA slid to $0.1487 on June 8, with RSI dropping to 12.78. The market was under strong selling pressure at the time. On June 25, ADA made a new lower low at $0.1380, but RSI posted a higher low at 25.10. Prices fell, but the momentum indicator improved.

This signal does not confirm the end of the downtrend. Still, it is worth noting that sellers' momentum is weakening even as prices continue to set lower lows. Selling pressure pushed ADA to lower prices between June 8 and June 25, but it can be interpreted as having less force than before.

RSI has since risen to 47.57, while the signal line pointed to 42.93. An uptrend line connecting 12.78 and 25.10 is also being maintained. If RSI rises above 50 and holds there, it could be a stronger confirmation signal that buying has regained control.

By price level, $0.16169 was presented as a key short-term zone. This level is the 0.786 Fibonacci retracement and has recently served as both support and resistance. Below it, $0.14993 has a 0.888 retracement and was cited as additional support. If ADA closes below this area, the market could test the June 25 low of $0.13800 again.

If $0.13800 breaks, downside risk increases. In that case, $0.11283 at the 1.272 extension and $0.10156 at the 1.414 extension could open up as the next target zones. That said, reaching those levels would require the broader cryptocurrency market to weaken further than it is now.

Conversely, a recovery to $0.18311 is needed to sustain a short-term rebound. This level is the 0.618 Fibonacci retracement. If ADA climbs back above this level and holds it, the short-term outlook could improve, with $0.22663 presented as the next upside target. Over the longer term, the previous swing high at $0.28935 remains a key resistance level.

Other momentum indicators also showed some signs of improvement. The MACD line was at 0.00462 and the signal line at -0.00095. During the sharp drop in June, the MACD histogram was in deeply negative territory, but it has recently moved closer to the zero line and showed a shift toward positive territory.

On the Bollinger Bands, the middle band is $0.16047, the upper band $0.19128 and the lower band $0.12966. ADA is currently moving above the middle band, and neither a clear upside breakout nor a further breakdown has been confirmed. In particular, the upper band at $0.19128 is close to the $0.18311 resistance level and is cited as a strong resistance zone that buying must overcome.

The point market participants need to check right now is clear. ADA needs to hold above $0.16169 on a daily close for the current bullish divergence to be considered valid. If it slips below $0.14993, it could signal that buyers failed to add strength to the improving momentum, increasing the chance of another test of $0.13800.

In the end, the current signal is closer to an early sign suggesting rebound potential. It appears that a judgment on whether the structure is shifting from a bearish market to a bullish market can be made when ADA regains $0.18311, RSI moves above 50 and the improving MACD trend continues.