Cardano (ADA) has been experiencing a bearish trend following an 8% decline last week. However, the formation of an inverted hammer on its weekly chart is providing a glimmer of hope for potential buyers. This formation typically indicates a shift from bearish to bullish sentiment, but confirmation is needed with a subsequent bullish candle.
The technical indicators for ADA are currently showing mixed signals. The Average Directional Index (ADX) is at 22.33, suggesting a weak trend. An ADX below 25 signifies a lack of strength in the current trend, indicating that short-term market sentiment may have a significant impact on price movements. Additionally, the Moving Average Convergence Divergence (MACD) lines are indicating bearish momentum, but there is a possibility of a potential shift towards a bullish trend.
Sell Wall Resistance
Despite the potential bullish indicators, ADA is facing a significant sell wall between $0.4208 and $0.4740. This sell wall comprises 4.84 billion ADA held by 445,330 addresses, posing a substantial resistance zone that must be overcome for any upward momentum to continue. Breaking through this resistance will require a considerable amount of buying volume, as evidenced by the current price just below this range.
The presence of the sell wall presents a challenging obstacle for Cardano bulls. While the confirmation of the inverted hammer on the weekly chart could signal a bullish reversal, the sell wall remains a key barrier that needs to be overcome. Buyers will need to generate significant momentum to push the price higher and break through this resistance zone.
Price Outlook and Catalysts
Failure to confirm the bullish indicators could lead to a retest of lower support levels around $0.30 to $0.35. Currently trading at $0.4014, ADA has seen a 4.28% decline in the last week. However, positive sentiments surrounding the Cardano ecosystem could potentially strengthen buying pressure.
One potential catalyst for bullish sentiment is the upcoming Chang hard fork. This pivotal update requires a majority of Cardano stake pool operators to transition to the latest node, 9.1.0. As of now, only 9.3% have made this transition, indicating a potentially positive development that could impact ADA price movement in the near future.
