AVAX dropped to key demand zone – Can bulls prevail?

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

• AVAX hit a crucial demand zone of $16.8 – $17.51.
• An increasing open interest could boost the recovery.

Avalanche [AVAX] could offer bulls hope if the $16.8 – $17.5 support zone prevents further plunge. So far, the support range has become a key demand zone thrice, offering bulls reprieve from an extended price drop. The fourth retest, at press time, offered discounted prices that could attract new buying opportunities. 

Read Avalanche [AVAX] Price Prediction 2023-24

Can the demand zone hold the plunge?

Source: AVAX/USDT on TradingView

In the past few weeks, AVAX traded between key demand and supply zones ($17 – $22). On the 12-hour chart, the Relative Strength Index (RSI) rebounded near the oversold territory, showing that buying pressure picked momentum. 

Moreover, there could be a MACD (moving average convergence divergence) bullish crossover in the next few hours/days, which could confirm the uptrend. Such an occurrence could offer bulls a signal of a strong recovery.  

Risk-averse bulls could wait for a retest of a pullback on the demand zone before entering long positions. The supply zone of $21.0 – 22.5 will be the target – offering a potential 20% hike in the next few days/weeks. 

However, key obstacles at $18 and $20 are worth watching. Bulls will also face another key resistance level at $23.7 if they overcome the selling pressure at the supply zone. 

A break below the demand zone ($16.8 – $17.5) will invalidate the bullish thesis. The drop could slow towards $15.84 or $14.23, offering shorting opportunities at these levels. 

AVAX’s open interest increased

Source: Coinglass

According to Coinglass, AVAX’s open interest (OI) rate increased significantly by press time after steadily declining in the past week. The OI surge at the time of writing suggested a significant demand for AVAX in the futures market – a bullish signal. 

How much are 1,10,100 AVAXs worth today?

If the OI increases after AVAX cross above $18, it will denote an increasing bullish momentum which could push the asset toward the supply zone of $22. However, the recovery could be undermined if Bitcoin [BTC] drops below $23k.

Therefore, bulls could track a bullish MACD crossover (golden cross), OI, and BTC price action before making moves.