Avalanche: Why AVAX traders must remain on the lookout for this

Since their ATH in November, Avalanche (AVAX) sellers have been leading the charge by keeping buying rallies in check. The resolutions of the recent symmetrical triangle pulled the alt below its 7-month trendline resistance (former support).

The existing setup was visibly bearish while AVAX sought to retest the 20 EMA (red). So, on a longer time frame, traders/investors need to be vigilant before placing long bets.

The buy volumes in the next few candlesticks would primarily affect the trajectory of the alt. If buyers intervene near immediate support, AVAX could face a tight period before continuing lower. At press time, AVAX was trading at $16.25, up 4.45% over the past 24 hours.

AVAX daily chart

Source: TradingView, AVAX/USDT

AVAX has lost more than 88% of its value since its ATH, plunging to its 10-month low on June 15. Immediate trendline resistance provided strong support for months until the symmetrical triangle collapse fueled the bearish effort.

This breakdown saw more sell volume than recent buy orders, thus representing a bearish edge.

As the price action approaches the lower Bollinger Bands (BB) band, buyers would aim to look for recovery opportunities from the $16 support. If so, AVAX could be caught in a squeeze in the times to come.

A convincing close below the $16 support would open up short selling opportunities that carry the target in the $13.5-$14.5 range. However, traders need to carefully assess the impact of macroeconomic factors on market sentiment.

Reason

Source: TradingView, AVAX/USDT

After struggling to break the 39 resistance, the RSI fell back into the oversold territory. Any close below the 30 level could result in a retest of the 26 support.

The bearish divergence of the price action with the CMF helped the sellers find renewed pressure. A sustained drop below the zero level would fit nicely into the bearish narrative.

Conclusion

Looking at the oversold levels of the BB and RSI, buyers would be keen to defend the immediate support. If a sustained close below the $16 zone, AVAX could see an extended pullback towards the $13-14 range.

Finally, investors/traders need to keep a close eye on Bitcoin’s movement. This reading would be important to complement these technical factors.

Leave a Comment

Your email address will not be published.