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Axie Infinity [AXS] advances on the price chart but could the bears have laid down a trap?

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Axie Infinity [AXS] advances on the price chart but the bears could be waiting to spring a trap

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

On a higher timeframe chart, Axie Infinity [AXS] formed a range since mid-June. Another point to note was that this range was right beneath a stiff resistance zone at $18. Bitcoin [BTC] also faced resistance in the $23k zone. For AXS, a move upward could be possible. However, the longer-term trend remained bearish, and the past month’s sideways trading might not mean the end of the downtrend.

AXS- 1-Day Chart

Axie Infinity [AXS] advances on the price chart but the bears could be waiting to spring a trap

Source: AXS/USDT on TradingView

On the daily chart, a strong downtrend was present from early November. In March, this downtrend appeared to be broken. However, the break quickly turned into a bull trap as the price continued to descend once more. In June, the price slipped beneath the $18 area (red box) which had acted as a demand zone in May.

In mid-June, AXS formed a range (cyan) between $12.2 and $18.3, with the $16-$18 area being a particularly heavy resistance area. The Relative Strength Index (RSI) has been below the neutral 50 line since early April, showing a steady and strong downtrend in progress. The price was also at the mid-point of the range (dotted white), which represented yet another resistance.

Even if the price poked above the mid-point of the range, and the RSI breaks past the neutral 50 line, a hidden bearish divergence would develop. The development of such a divergence with the price headed into the resistance zone would further highlight a bearish case for AXS.

AXS- 4-Hour Chart

Axie Infinity [AXS] advances on the price chart but the bears could be waiting to spring a trap

Source: AXS/USDT on TradingView

On the four-hour chart, a more bullish bias was apparent. The RSI has flipped the neutral 50 line to support, and the price has made a series of higher lows over the past week. Hence, the bias was bullish going into the weekend.

The Parabolic SAR gave a buy signal and the 20-period SMA was respected as support over the past week. The Bollinger bands were climbing over the past week but did not widen to show heightened volatility. Rather, the price was within a steady lower timeframe uptrend and tested the mid-range as resistance.

Even though the momentum was bullish, the A/D line has been falling in recent weeks. The recent push upward was not backed by a large spike on the A/D indicator. This meant that demand was weak behind AXS.

Conclusion

The lack of strong demand, as well as the higher timeframe trend, was in favor of the sellers. Lower timeframes hinted at a bullish bias, and a possible move toward $17-$18 could materialize over the next few days. Aggressive traders can position themselves long on AXS, with a stop-loss beneath the 4-hour Parabolic SAR at $14.74. More risk-averse traders can look to short the asset near the range highs.

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Akashnath Sumukar works as a Senior Journalist at AMBCrypto. Based in Chennai, India, he has been an avid follower of the cryptocurrency market since Bitcoin’s boom and bust cycle of 2017. A graduate in Chemical Engineering, he is an expert in technical analysis. In fact, Akashnath has a particular interest in reading price charts and predicting how an asset will move over the short and long term. A self-taught trader and as someone who holds cryptos himself, he is always on the lookout for the next opportunity he can possibly capitalize on, while also educating his audience.
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