Avalanche – How tired buyers, active sellers are affecting AVAX’s weak rally
Second rejection from the $9.6 supply zone cemented the short-term range formation in place.
Avalanche [AVAX] rallied by 13.71% in just under 18 hours on Tuesday, 7 April. The move from $8.46 to $9.62 came alongside heavy spot volume. The announcement that the Chicago Mercantile Exchange (CME) Group would launch Futures tied to Avalanche in May likely buoyed prices.
The market-wide bounce also helped AVAX bulls. And yet, as Coinalyze data showed, the Open Interest hike was timid compared to the 13% price bounce. The OI trends showed that the first rally to the $9.6 resistance saw a much steeper OI rise compared to the second one since Monday.
Conversely, the Spot CVD saw a much sharper uptick during the second rally. During this move, the funding rate had been negative.
This hinted at a cluster of signals not in sync with one another. Putting them together, speculative interest during the most recent bounce to $9.62 was low, but spot belief was firm.
And yet, this spot belief, combined with the hike in trading volume, was still not enough for AVAX to break the $9.45-$9.60 supply zone.
On the 1-day chart, the swing structure remained bearish. Though the MFI was moving higher to indicate greater buying pressure and upward momentum in April, the CMF remained below -0.05 to indicate capital flows remained directed out of AVAX.
The seller dominance was evident when the $10.34 local highs were not reclaimed during the mid-March rally. Since then, the $8.3-area has been retested and has seen a rebound too.
What will it take for the bulls to achieve a breakout?
The high-volume spike into the $9.60 supply zone was telling of buyer exhaustion. They spent themselves trying to force a breakout, but the sellers were stronger. At the time of writing, the CMF and the MFI signaled bearishness in the short-term.
This tied in well with the range formation (purple) from $8.56 to $9.46. The second rejection within a few days at the range highs meant that the mid-range at $9 has been holding firm.
Therefore, traders should be cautious of another pullback to $9 and $8.3, instead of expecting a quick breakout past $9.6 next.
Final Summary
- Announcement that the CME Group would launch Avalanche Futures contracts helped initiate the rally from $8.4 to $9.6.
- Long-term price structure of AVAX has been bearish, with the altcoin trading within a range since late March.
