Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be considered investment advice
In their efforts to ease down the sell-off situation, the buyers finally managed to flip the three-month trendline resistance to support (white, dashed). After the recent retracement pulling down the price towards its February lows, Axie Infinity (AXS) marked a down-channel (yellow) on the 4-hour timeframe.
For the bulls to break the bounds of the current pattern, they needed to find a stiff close above the 50 EMA (cyan). Failing which, the alt would continue its tight phase. At press time, AXS was trading at $47.363.
AXS 4-hour Chart
Source: TradingView, AXS/USD
Since late March, AXS has formed consistent lower highs and troughs. A falling wedge and a descending channel mapped out this course in the 4-hour timeframe. This pullback went all the way until the $43-mark on 18 April.
As this mark coincided with the lower trendline of the down-channel and the trendline support, the buyers were able to clinch an upswing above its 20 EMA (red). The Pitchfork tool’s lower trendline offered excellent support as AXS entered into a squeeze phase over the last day.
What’s more, the recent bearish engulfing created a stiff resistance in the $47-$48 range along with the 50 EMA barrier. Thus, a likely reversal from this mark could delay its recovery. Any fall below the Pitchfork’s lower boundary would brace the alt for a $45-retest before a bullish comeback. For an entry trigger, the buyers should ideally wait for a compelling close above the median of Pitchfork.
Rationale
Source: TradingView, AXS/USD
The RSI’s reading hinted at resonated with the recently increasing buying force. While it lurched just above the mid-line, it still needed to find a close above the 53-resistance to foster a breakout rally on AXS’s chart.
On the other hand, the CMF was on its way up to test the convergence point of its trendline and horizontal resistance. Any fallout from this level would confirm a hidden bearish divergence with the price.
Conclusion
Given the confluence of multiple resistances at the $48-zone, any near-term drawdowns should not surprise the investors/traders. The bulls can look for entry points after a sustained close above the $48-mark near the median of the Pitchfork.
To top it up, the alt shares an % 30-day correlation with Bitcoin. Thus, keeping an eye on Bitcoin’s movement would be essential for making a profitable move.
