Zec Retracts From 505 But The Bullish Narrative Is Far From Over

Zcash (ZEC) gained much popularity as it moved toward the $505 region but faced significant selling pressure. The move was met with a retreat as traders decided to take profits in one of the most critical psychological resistance regions on the charts.

The development caused controversy among traders regarding the cryptocurrency’s future. Some suggest that the rejection indicates reduced momentum after the fast-moving advance, while others say the retracement is natural after the gains.

However, despite the negative move, ZEC remains above the support levels and the overall recovery setup remains intact. In any case, the following trading sessions will define which side wins.

Zec Retreats Amid Major Resistance Rejection

After reaching around $505, ZEC moved down toward the $466 level due to an increase in profit taking. The high number of leveraged longs at the resistance level provided additional selling pressure when prices reversed course.

This drop in price triggered numerous liquidations and helped market makers take advantage and push prices down temporarily. Soon after, buyers emerged at the $440 support level to prevent the fall in prices beyond that.

This support level is crucial for the existing market structure, as a sustained breach would give an impetus to the bears to move further downward. On the other hand, a successful defense of this level means buying interest still exists.

Social Sentiment Falls While Confidence Rises

The market’s mood has changed significantly over the past few weeks as well. As per Santiment, there was an uptick in social activity around Zcash after it dipped below $362 amid the revelation of the vulnerability of the Orchard shielded pool. Daily social mentions exceeded 1,100 in those days as traders responded to the risk.

On the other hand, social sentiment fell dramatically as the price recovered by almost 29%. Low social activity does not necessarily indicate a bearish sentiment. In most scenarios, less chatter indicates a relatively calm market and fewer panic sales.

Ironwood Network Upgrade Improves Future Prospects

Among the major reasons to be optimistic about Zcash’s future is the scheduled Ironwood network upgrade.

According to developers, the Ironwood network upgrade will be implemented in several days, bringing enhanced mathematics-based proof of concept designed to protect against unnoticeable forgery in Zcash’s privacy pools.

The scheduled network upgrade comes after its emergency fix for the issue related to the vulnerability of the Orchard shielded pool.

Investors find the network upgrade important for Zcash’s future prospects, regardless of current price dynamics.

Technical Indicators Highlight The Most Critical Resistance Level

Technical analysis indicates that ZEC is set to face another crucial challenge.

The first resistance level lies in the range of $480 to $490. It incorporates past horizontal resistance, the upper Bollinger Band, and the 0.786 Fibonacci retracement level.

According to analyst Ardi, the potential to break past $480 on the daily chart can give bulls hope of reaching $500. A further breakdown below this level may provide an opportunity to target the next resistance level at $540.

CryptDollar, another analyst, has also pointed to this resistance level as the most critical one to watch before confirming the continuation of the latest recovery trend.

Momentum Indicators Still Favor Bulls

While there are no definitive signs yet, several signals support the current trend.

Chaikin Money Flow is still positive at 0.13, indicating capital inflows into the asset. In addition, the Aroon Up indicator remains above 92%, meaning the uptrend is still alive.

TradingView’s Moving Average still shows a Strong Buy signal despite several neutral momentum oscillators.

Liquidation charts can also be helpful for gauging future volatility. Large short positions are formed in the range of $480 to $500. As a result, a breakout of the range will likely bring more momentum to the next leg higher due to short liquidations.

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