ADA is currently eyeing an inverted hammer formation on its weekly chart, but a significant sell wall threatens a roadblock to any potential rally.
Cardano (ADA) has continued to witness a downward push following its 8% collapse last week. However, the potential formation of the inverted hammer offers a glimmer of hope. An inverted hammer shows potential buying pressure overcoming early selling.
While this pattern typically suggests a possible trend reversal from bearish to bullish, confirmation is necessary with a subsequent bullish candle. However, ADA’s technicals show mixed signals, with slim chances of such a bullish candle.
Notably, the Average Directional Index is at 22.33, indicating a weak trend. An ADX below 25 suggests that the current trend lacks strength, which means that any price movement may be majorly influenced by short-term market sentiment.
The Moving Average Convergence Divergence lines also show bearish momentum, but hint at a potential shift. The MACD line is currently at -0.0263, just below the signal line at -0.0182, with the histogram slightly negative. A MACD crossover could indicate a bullish shift, but this remains to be seen.
Cardano faces potential sell wall
Meanwhile, Cardano bulls would need to battle a sell wall between $0.4208 and $0.4740 if a bullish candle is going to form for the asset. This sell wall consists of 4.84 billion ADA held by 445,330 addresses.
The sell wall forms a massive resistance zone that ADA must overcome to continue any upward momentum. This resistance is substantial and will require significant buying volume to break through. The current price just below this range suggests that traders are aware of the barrier.
If the inverted hammer on the weekly chart is confirmed, it could pave the way for a bullish reversal. However, the sell wall shows a challenging obstacle.
Buyers must generate significant momentum to break this resistance and push the price higher. On the downside, failure to confirm the bullish indicators could see the price retesting lower support levels around $0.30 to $0.35. ADA is currently trading at $0.4014, down 4.28% in the last week.
Positive sentiments around the Cardano ecosystem could play a role in strengthening the buying pressure. One development capable of triggering such bullish sentiments is the Chang hard fork. The pivotal update requires 70% of Cardano stake pool operators to transition to the latest node, 9.1.0. At the time of writing, only 9.3% have transitioned.
