Cardano (ADA) is currently showing signs of a potential inverted hammer formation on its weekly chart. This pattern typically indicates a shift from bearish to bullish momentum, with buying pressure overcoming initial selling. However, confirmation of this trend reversal is essential, with the need for a subsequent bullish candle to solidify the pattern. Despite this optimistic indicator, ADA’s technical analysis presents mixed signals. The Average Directional Index (ADX) stands at 22.33, signaling a weak trend lacking substantial strength. An ADX below 25 suggests that short-term market sentiment may significantly impact price movement.
The Moving Average Convergence Divergence (MACD) lines for ADA also display bearish momentum, but hint at the possibility of a shift. Currently, the MACD line is at -0.0263, slightly below the signal line at -0.0182, with a slightly negative histogram. A potential MACD crossover could signal a bullish shift in momentum, but this scenario remains uncertain. Despite these positive indicators, Cardano bulls face a significant obstacle in the form of a sell wall between $0.4208 and $0.4740. This substantial resistance zone consists of 4.84 billion ADA held by 445,330 addresses, highlighting the challenging barrier ADA must overcome to sustain upward momentum.
The current price of ADA just below the sell wall range suggests that traders are well aware of this resistance level. If the inverted hammer pattern on the weekly chart is confirmed, it could pave the way for a bullish reversal. However, breaking through the sell wall will require substantial buying volume and momentum. Failure to confirm the bullish indicators could lead to ADA retesting lower support levels around $0.30 to $0.35. As of now, ADA is trading at $0.4014, marking a 4.28% decline over the past week.
Positive sentiments surrounding the Cardano ecosystem could strengthen buying pressure for ADA. One key development that could trigger bullish sentiments is the Chang hard fork. This update mandates 70% of Cardano stake pool operators to transition to the latest node, 9.1.0. However, at the time of writing, only 9.3% have made this transition, highlighting the need for increased adoption and participation in the Cardano community to drive price movement.