Avalanche: A hurdle exists at $11.94; investors could still take home a profit at…
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion
- AVAX retested the $11.94 four times without a successful breakthrough
- AVAX bears had more influence and could push the price down to $11.17
Avalanche [AVAX] has been in a downtrend since August 2022. It also curved a falling wedge pattern on its latest price movement. While falling wedge patterns are typically bullish and could imply a trend reversal. However, AVAX still faced key obstacles.
Read Avalanche’s [AVAX] price prediction 2023-2024
At press time, AVAX was trading at $11.79, with a red flicker, showing the bears had a slight upper hand. Imperatively, AVAX broke below $11.947 after Bitcoin [BTC] dropped below the $16,900 level. Its sensitivity to BTC’s performance was worth monitoring for the asset’s next price movement.
If AVAX bulls fail to break above $11.79, bears could run down the price to $11.17 or below.
The obstacle at $11.94: Can the bulls clear it?
The immediate obstacle at $11.94 was retested four times in the past four days. Conventional wisdom in trading holds that the more the resistance level is retested, the more it could break.
However, the technical indicators suggested that bears had the upper hand in the market and could render the above conventional wisdom irrelevant in the current market scenario.
In particular, the Relative Strength Index (RSI) was at 38, with a gentle slope pointing to the oversold area after a recent increase. This showed that buying pressure increased recently but faced intense opposition from sellers.
In addition, the Directional Movement Index (DMI) showed the red line (sellers), at 30.90, was way above the green line (buyers), 16.65, and the leverage mark of 25 units. This indicated that sellers had more influence in the market than buyers by the time of publication.
Therefore, selling pressure could increase in the mid-term, pushing AVAX’s price to $11.39, $11.17, or below. As such, these levels can serve as short-selling targets with a stop loss slightly above the current resistance level of $11.94.
A break above the resistance level of $11.94 will invalidate the bearish forecast, especially if BTC is bullish. Such an upside move will turn AVAX’s focus toward the 20-period Moving Average (MA) target of $12.96.
Investors were pessimistic about AVAX despite demand in the derivatives market
AVAX investors remain bearish on the asset as the weighted sentiment slipped deeper into the negative zone. In addition, AVAX recorded a recent decline in development activity that corresponded with a price drop. Could the recent uptick in development activity boost the price?
The recent uptick in development activity corresponded with increased demand for AVAX in the derivatives market. But the demand had a slight dip by the time of publication.
How many AVAXs can you get for $1?
The demand in the derivatives market with a negative sentiment paints a mixed signal. Investors can get much more reliable clarity if they add BTC’s performance to their watchlist.