Cardano (ADA) is currently facing a challenging situation on its weekly chart. Despite the potential formation of an inverted hammer, there is a significant sell wall looming ahead. The inverted hammer typically suggests a possible trend reversal from bearish to bullish, but confirmation is needed with a subsequent bullish candle. Unfortunately, ADA’s technical indicators are sending mixed signals. The Average Directional Index is at 22.33, indicating a weak trend. This suggests that any price movement may be primarily influenced by short-term market sentiment. Additionally, the Moving Average Convergence Divergence lines show bearish momentum, with the MACD line just below the signal line and the histogram slightly negative.
One major obstacle that Cardano bulls must overcome is a sell wall between $0.4208 and $0.4740. This sell wall consists of 4.84 billion ADA held by 445,330 addresses, forming a massive resistance zone that ADA needs to break through to continue any upward momentum. The current price just below this range indicates that traders are wary of this barrier. Breaking through this sell wall will require significant buying volume and momentum, making it a challenging task for buyers.
Confirmation of the inverted hammer on the weekly chart could pave the way for a bullish reversal for ADA. However, failure to confirm the bullish indicators could see the price retesting lower support levels around $0.30 to $0.35. Currently trading at $0.4014, ADA has experienced a 4.28% decline in the past week. Positive sentiments surrounding the Cardano ecosystem, particularly the upcoming Chang hard fork, could help strengthen buying pressure. The Chang hard fork requires 70% of Cardano stake pool operators to transition to the latest node, 9.1.0, but at the time of writing, only 9.3% have made the transition.
Overall, Cardano is facing several challenges on its chart, with technical indicators and a significant sell wall posing obstacles to any potential rally. Traders and investors will need to closely monitor price movements and market sentiment to gauge the likelihood of a bullish reversal for ADA.
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