Avalanche Volume Profile shows two critical resistances for bulls to overcome
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
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- The short-term range showed confluence with the volume profile tool.
- Avalanche bears have been strong in the $18 area.
Avalanche traded within a range on the price charts, and the $16.4 support zone has been defended multiple times in March. The halted block production on 23 March saw AVAX bulls stopped near the $17.6 zone.
Read Avalanche’s [AVAX] Price Prediction 2023-24
Bitcoin has also traded within a range over the past week, and its price action could heavily influence the direction of Avalanche. As things stand, AVAX short sellers could watch out for a selling opportunity in case of a move upward.
The confluence of range highs and Value Area Highs could entice bears
The Volume Profile Visible Range tool showed the Point of Control (red) to lie at $17.3. This marked it as the point where the most volume of trading occurred in the visible range, which extended back to early March.
The Value Area High was at $17.8 and the Value Area Low was at $15.8. Moreover, AVAX traded within a range (yellow) that extended from $15.47 to $18. The horizontal level at $16.37 and the mid-range level at $17.73 have acted as support over the past few days.
At the time of writing, Avalanche saw another bounce from the support level. This could see the price ascend toward the $18 resistance. In that scenario, short sellers can look for rejection on lower timeframes before entering short trades.
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Invalidation of this bearish notion would be a session close above $18.3. The bearish targets are the $16.4 support zone and the range lows at $15.5, but the latter could be an ambitious target.
Spot CVD showed signs of recovery after a long downtrend
The predicted funding rate was barely positive which showed the market sentiment was only weakly bullish. The spot CVD saw a minor bounce after weeks of a downtrend, which indicated that buying pressure was present but not dominant.
The fact which would encourage bulls was the steady decline in Open Interest since mid-March. Each bounce in AVAX prices saw weaker and weaker bounces on the OI, which showed fewer bullish speculators over time. This was a sign of bearish sentiment.