Avalanche offers a buying opportunity at $14.5, here’s why you should take it
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
- Avalanche has trended upward in the past three weeks and established a bullish structure even on the 1-day timeframe.
- The $14 area represented a strong resistance zone and the breakout was a positive sign.
Avalanche [AVAX] surged to $15.97 on Friday, 14 July, registering gains of 32% measured from 21 June, when the AVAX price action took a bullish turn on the 1-day chart. The price action continued to favor the bulls.
Read Avalanche’s [AVAX] Price Prediction 2023-24
News of Uniswap [UNI] expanding into the AVAX network helped explain the strong rally that Avalanche saw last week. After the breakout past the $14.5 zone and the subsequent retest, it was likely that AVAX would continue to move higher.
The bullish structure and trend meant a move to $16 and higher was possibleThe OBV showed that the past few days saw enormous buying volume in the Avalanche market that catapulted priced above the $14.5 resistance zone. This area, highlighted by the red box, was a bearish order block on the 1-day timeframe from 6 June.
It was previously tested as resistance on 9 July, and AVAX met a brief rejection to fall to $12.85 before rallying once again. Based on this move, a set of Fibonacci retracement levels were plotted. It showed the 50% and 61.8% retracement levels sat at $14.41 and $14.04 respectively.
Hence these are the two levels traders can look to bid AVAX at, targeting a move to the local highs at $16 and a 23.6% extension at $16.71. Invalidation of this idea would be a drop below the 78.6% retracement level at $13.52.
The RSI and the moving averages showed bullish momentum. The H4 market structure was also bullish. But a drop below the higher low at $14.04 would shift the bias toward the bearish side.
The Open Interest started to decline after the short-term AVAX rejection from $15The 1-hour chart showed that the OI was on a strong upward trajectory alongside the prices on 15 July. However, the conviction of the buyers began to weaken as the price began to slump following a move to the $15.35 mark.
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This need not dissuade swing traders as it was the weekend. And volume was low and the market might not be ready for a breakout. The declining spot CVD over the past two days was also a concern for short-term bulls. It was at odds with the OBV, which saw only a minor pullback and showed bullish dominance overall.