Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion
- AVAX’s MFI was in an overbought zone and is ripe for a possible price reversal
- However, a breakout above $12.10 would invalidate the bearish forecast
Avalanche’s [AVAX] 2023 rally gained over 14% after rising from $10.71 to $12.30. It then cooled off, and the price correction settled at $11.45.
At press time, AVAX was in another uptrend but faced a challenge after Bitcoin [BTC] failed to overcome $17K resistance. AVAX was trading at $11.77 and could fall lower to retest the $11.45 support if the BTC price correction continued.
Read Avalanche’s [AVAX] Price Prediction 2023-24
The target at $12.10: Can the bulls aim at it?
AVAX fell below its late December trading range of $11.59 – $11.85 but found solid support at $10.71. The transition into the new year formed a double bottom, which set the stage for a price recovery.
However, AVAX encountered a bearish order block at $12.10, forcing it to a price correction, which was held in check by support at $11.45.
The press time price recovery may prove difficult as the Money Flow Index (MFI) had reached overbought territory. This suggests that accumulation has peaked and distribution could be underway, which could trigger a price reversal.
The Relative Strength Index (RSI) was rejected at the midpoint but moved slightly up and sideways. The On-Balance Volume (OBV) also declined slightly. This indicated that buying pressure gradually increased after a steep decline, but it was not enough to push the bulls to target the $12.10 level.
Therefore, AVAX could fall back to $11.59 or $11.45. Short sellers can sell high and buy back cheaper at these levels.
However, a breakout above the $12.10 bearish order block would invalidate the forecast. Such a move could allow AVAX bulls to target $12.46, especially if BTC is bullish.
AVAX’s OI fell, but its outlook and demand in the futures market remained unchanged
According to Coinglass, AVAX’s open interest increased from mid-December and appeared to have peaked at press time. This indicated that AVAX saw an increased inflow of money into the options and futures markets.
However, the decline in AVAX’s OI at press time suggests that more money was leaving the futures market.
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Nonetheless, AVAX’s sentiment remained positive, and demand in the derivatives market remained unchanged, as evidenced by the positive and unchanged Binance Funding Rate for the AVAX/USDT pair.
This means that AVAX could potentially rally if BTC makes a recovery attempt. Therefore, investors should watch BTC before taking any action.