Connect with us

Analysis

Avalanche [AVAX]: How investors can make the most out of this pattern’s break

Published

on

Avalanche [AVAX]: How investors can make the most out of this pattern's break
Source: Canva

Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be considered investment advice.

Over the past week, the altcoin market saw a gradual recovery while the bulls stepped up their pressure. Avalanche [AVAX] found a convincing close above its EMA ribbons in the four-hour timeframe.

But with the seven-week trendline resistance (white, dashed) curbing the buying rallies, the sellers have kept a check on the alt’s peaks. A robust close below the current pattern could propel a near-term drawdown in the coming days. At press time, AVAX traded at $20.02.

AVAX 4-hour Chart

Source: TradingView, AVAX/USDT

AVAX shed more than 58% of its value (from 23 May) and dived toward its ten-month low on 19 June. Since then, buyers have held on to the $15.95 grounds while provoking two up-channel recoveries over the last few weeks.

The altcoin’s price has been struggling to find a trend-altering rally while sellers re-established their vigor at trendline resistance. For over three weeks now, this resistance has offered rebounding opportunities for the sellers.

With the EMA ribbons looking north, the buyers controlled the immediate trend. However, the price action now approached its trendline resistance and the 200 EMA (green). So, a likely reversal from the $20-zone could cause a pullback.

A sustained close below the up-channel could pull AVAX to retest the $19.1-mark in the coming sessions. Any close below this level would only affirm the selling narrative. To change this outlook, the bulls still had to find a break above the $20-mark and the trendline resistance.

Rationale

Source: TradingView, AVAX/USDT

The Relative Strength Index (RSI) has resonated with the recently increased buying power by maintaining its position above the midline. A continued trajectory above the 56-support could aid the buyers in preventing a drop below the EMA ribbons.

The On-Balance Volume (OBV) has also iterated an increase in buying power, particularly over the last four days. But the Moving Average Convergence Divergence (MACD) saw a bearish crossover and suggested ease in the buying pressure. A continued southward tendency below the zero-mark could impair the buying comeback possibilities.

Conclusion

AVAX walked on thin ice at press time. A fall below the pattern could aggravate the selling inclinations. In this case, the targets would remain the same as above.

However, a broader sentiment analysis alongside on-chain developments should be taken into consideration to make a profitable move.

Read the best crypto stories of the day in less than 5 minutes

Subscribe to get it daily in your inbox.


Please select your Email Preferences.

With a background in financial analysis and reporting, Yash is a full-time journalist at AMBCrypto. He has a keen interest in blockchain technology, with a primary focus on technical analysis of cryptocurrencies.

Click to comment

Leave a Reply

Your email address will not be published.

Disclaimer: AMBCrypto's content is meant to be informational in nature and should not be interpreted as investment advice. Trading, buying or selling cryptocurrencies should be considered a high-risk investment and every reader is advised to do their own research before making any decisions.