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AVAX crosses above downtrend line – is a recovery sustainable

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AVAX crosses above downtrend line - is a recovery sustainable

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Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.

  • AVAX recovered slightly above a key short-term downtrend line. 
  • The sentiment was positive, but AVAX faced a price rejection at press time. 

Avalanche’s [AVAX] recovery could be limited despite improved investors’ confidence. The asset recently dropped from a high of $22.8 to a low of $19.4, a 14% plunge. The drop happened after Bitcoin [BTC] temporarily lost the $23k zone. 


Is your portfolio green? Check out the AVAX Profit Calculator


Bulls launched an impressive recovery attempt, but their efforts seemed unsustainable, as suggested by technical indicators. 

AVAX faced price rejection at $21.04

Source: AVAX/USDT on TradingView

Bulls inflicted a bullish breaker after finding steady support at $19.50. The momentum saw AVAX break the resistance at $19.81 and a convincing cross above the downtrend line, which flipped the short-term market structure to bullish. 

However, the price rejection at $21.04 set the bulls back. AVAX could settle on the seven-period EMA of $20.52 or $20.40 support levels before returning to retest the 21.04 level. 

However, if BTC lost the $23k zone, AVAX bears could devalue the asset below $20.40 and 26-period EMA in the next few hours. The extended plunge would invalidate the bias described above. But the drop could settle at $19.81 or the downtrend line. 

The Relative Strength Index (RSI) and On Balance Volume (OBV) registered a downtick, indicating that bulls could be undermined in the short term. 

AVAX recorded improved investors’ confidence, but…

Source: Santiment

As per Santiment’s data, AVAX recorded improving investors’ confidence from 5 February, as evidenced by the flipping of weighted sentiment from negative to positive. Notably, the investors’ outlook could have been boosted by the rising development activity in the same period.

It showed that investors felt assured by the network’s prospects, which was also reflected in a surge in price.


Read Avalanche’s [AVAX] Price Prediction 2023-24


However, the Funding Rate was relatively flat in the same period. Despite being positive, the lack of more demand for the asset in the derivatives market could undermine the strong uptrend momentum needed to bypass the price rejection level at $21.04.  

Therefore, AVAX recovery momentum could be limited, and traders should watch for the price rejection level at $21.04 alongside BTC’s price action.

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Saman Waris works as a News Editor at AMBCrypto. She has always been fascinated by how the tides of finance and technology shape communities across demographics. Cryptocurrencies are of particular interest to Saman, with much of her writing centered around understanding how ideas like Momentum and Greater Fool theories apply to altcoins, specifically, memecoins. A graduate in history, Saman worked the sports beat before diving into crypto. Prior to joining AMBCrypto 2 years ago, Saman was a News Editor at Sportskeeda. This was preceded by her stint as Editor-in-Chief at EssentiallySports.
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