Avalanche [AVAX] consolidates near supply zone; Is a pullback likely?
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion
- AVAX was bullish, but buying pressure weakened at press time.
- Daily price volatility eased; sentiment improved.
Avalanche [AVAX] broke out of its multi-week range of $16.5 – $18.3 and retested a stiff supply zone of $21 – $22. The price action in the past few hours oscillated between $20.4 and $21.5, indicating that short-term bulls weren’t exiting their positions – a bullish sentiment.
However, AVAX may be in for a quick pullback if more traders lock in short-term gains at the current level.
Read Avalanche [AVAX] Price Prediction 2023-24
Meanwhile, Bitcoin [BTC] reclaimed its $30k but still traded within the lower part of its recent range of $29.6k – $30k. It shows BTC also faced looming selling pressure which could spill to AVAX and other altcoins.
Will sellers gain more influence?
At press time, the RSI retreated from the overbought zone indicating buying pressure declined. In addition, the stochastic RSI headed to the oversold zone – a likely increased selling pressure without overruling a potential reversal. Besides, the sharp rise of ADX (Average Directional Index) was easing, reinforcing a weakening uptrend.
As such, AVAX may be in for quick retracement before attempting a rebound. Near-term bulls could wait and profit from the rebound, especially if AVAX drops to 50-EMA ($19.62) or the confluence area of $18.31.
The confluence area lines up with range support alongside an ascending trendline and could offer a good buying opportunity, especially if AVAX retests the supply zone.
A close above $22 (supply zone) will invalidate the bearish outlook. Such an upswing could dent the prevailing bearish sentiment and tip near-term bulls to target higher levels. The next key resistance levels lay at $22.80 and $23.76.
Supply outside of exchanges declined despite whale activity
Is your portfolio green? Check AVAX Profit Calculator
AVAX’s market cap increased sharply following AVAX’s appreciation from $18 to above $20. But, the market cap dropped as price volatility eased. It means AVAX’s price could stabilize before experiencing volatility again.
Nonetheless, the weighted sentiment improved, reiterating investors were confident about the asset’s positive prospects. However, any further uptrend and clearing of the supply zone hurdle may heavily depend on BTC pushing beyond $30.4k.