...
Tuesday, December 6, 2022

Avalanche nears key breakdown level that could sink AVAX price by another 65%

399
SHARES
2.3k
VIEWS


Avalanche (AVAX) gained 0.5% to succeed in over $31 on May 23 however AVAX price stays trapped inside a buying and selling vary that seems like a “bear pennant” construction.

Avalanche could get buried technicals 

Bear pennants are bearish continuation patterns, i.e., they resolve after the price breaks out of them to the draw back after which—as a rule of technical evaluation—falls by as a lot as the peak of the earlier downtrend, additionally referred to as “flagpole.”

AVAX is nearing a technical breakdown as its price strikes towards the pennant’s apex, i.e., the purpose the place its higher and decrease trendlines converge.

This paints the bearish goal for the AVAX/USD pair at $11.50 by June 2022, down about 65% from at this time’s price, as proven beneath.

AVAX/USD day by day price chart that includes ‘bear pennant’ breakdown setup. Source: TradingView

AVAX price: key help ranges

Conversely, AVAX’s breakdown setup towards $11.50 could fell quick as a result of sure key help areas.

For occasion, the Avalanche token’s quantity profile exhibits it buying and selling close to its level of management (POC)—the level the place the merchants have been most lively since 2021—round $32.

Interestingly, the level was instrumental in capping AVAX’s draw back makes an attempt within the August-September 2021 session; it preceded a 390% bull run, which noticed AVAX reaching its record high of around $150 in late November 2021.

AVAX/USD day by day price chart that includes quantity profile. Source: TradingView

The POC level additionally served as a median throughout the consolidation development witnessed between January 2021 and May 2021. Now, It holds as a price ground whilst AVAX eyes the bear pennant breakdown, as mentioned above.

Meanwhile, making a Fibonacci retracement graph from AVAX’s $2.75-swing low to $97.50-swing excessive exhibits AVAX consolidating between its 0.618 Fib line (close to $40) and 0.786 Fib line (round 23), as proven beneath. 

AVAX/USD weekly price chart that includes Fib help and resistance ranges. Source: TradingView

That raises Avalanche’s risk of retesting $23 as help, adopted by a rebound transfer towards $40. Such a transfer would danger invalidating the bear pennant setup.

Fundamentally bearish

Today, Avalanche trades almost 78% beneath its file excessive of round $150, burdened by a robust bearish sentiment elsewhere within the crypto market in the next rate of interest atmosphere.

In addition, the latest Terra ecosystem meltdown has additionally burdened the costs of AVAX and different cryptos decrease.

But the worst continues to be but to return if AVAX continues trending in sync with the highest crypto Bitcoin (BTC) and, in flip, its world risk-on counterparts, reminiscent of Nasdaq. The correlation coefficient between Avalanche and Nasdaq was 0.91 as of May 23, exhibiting that they’ve been transferring in near-perfect tandem.  

Related: Bitcoin macro bottom ‘not in yet’ warns analyst as BTC price holds $30K

On the brighter notice, AVAX exhibits promise of an interim upside situation with a divergence between its rising relative power index (RSI) and falling costs, in accordance with Scott Melker, an unbiased market analyst.

AVAX/USD day by day price chart exhibiting bullish divergence. Source: Scott Melker/TradingView

“There are potential bullish divergences with oversold RSI on a ton of day by day altcoin charts,” mentioned Melker, including:

“Need definitive elbow up on RSI, however I nonetheless assume we have now been bottoming right here throughout markets…. for now.”

The views and opinions expressed listed below are solely these of the creator and don’t essentially replicate the views of Cointelegraph.com. Every funding and buying and selling transfer entails danger, you must conduct your individual analysis when making a choice.