Cardano (ADA) is eyeing an inverted hammer formation on its weekly chart, but a substantial sell wall poses a roadblock to any potential rally.
Cardano has experienced a downward push following its 8% decline last week. However, the potential formation of the inverted hammer suggests buying pressure overcoming early selling.
While this pattern often indicates a trend reversal from bearish to bullish, confirmation with a subsequent bullish candle is necessary. ADA’s technical indicators show mixed signals, casting doubt on this bullish candle forming.
The Average Directional Index (ADX) stands at 22.33, signaling a weak trend. An ADX below 25 suggests a lack of trend strength, with short-term market sentiment likely majorly influencing price movements.
The Moving Average Convergence Divergence (MACD) lines indicate bearish momentum but hint at a possible shift. The MACD line is currently -0.0263, just below the signal line at -0.0182, with a slightly negative histogram. A MACD crossover could signal a bullish shift, although this remains uncertain.
Cardano faces potential sell wall
Cardano bulls must battle a sell wall between $0.4208 and $0.4740 for a bullish candle to form. This sell wall comprises 4.84 billion ADA held by 445,330 addresses.
This sell wall forms a critical resistance zone ADA must overcome to continue any upward momentum. The substantial resistance will require significant buying volume to break through. The current price below this range indicates traders are aware of this barrier.
Confirmation of the inverted hammer on the weekly chart could pave the way for a bullish reversal, yet the sell wall remains a significant obstacle.
Buyers must generate considerable momentum to break this resistance and push prices higher. Failure to confirm bullish indicators could lead to a retest of lower support levels around $0.30 to $0.35. ADA currently trades at $0.4014, down 4.28% in the last week.
Positive sentiment around the Cardano ecosystem could enhance buying pressure. One development with potential to trigger bullish sentiment is the Chang hard fork. The pivotal update requires 70% of Cardano stake pool operators to transition to the latest node, 9.1.0. As of writing, 9.3% have transitioned.
