After nearly two months, Axie Infinity [AXS] finally pulled off a string of consistently higher troughs for two weeks. But the bears have withheld their influence on the altcoin’s peaks for weeks now.
As the current phase tightens, AXS is entering into a vital territory that could mold the fate of its upcoming rallies.
The $20-zone has assumed significant importance to potentially provoke a down breakout. Any close below the lower boundary of the Pitchfork would set AXS up for a near-term setback.
At press time, AXS traded at $20.697, down by 1.76% in the last 24 hours.
AXS 4-hour Chart
Since early April, AXS followed the footsteps of the king coin and resonated with the market-wide liquidations. After dropping below some crucial price points, the alt sailed around the 20$-baseline near its Point of Control (POC, red).
The recent pullback went all the way until its ten-month low in the $16-zone on 11 May. Although the buyers have shown resilience, they have failed to spur an uptick in the volume trend.
With the 20 EMA (green) and the POC currently coinciding at the $21-resistance, AXS could find it difficult to drive an upward move. Further, the past two weeks chalked out a bearish pennant after a steep flagpole on the 4-hour timeframe.
As a general rule, bearish pennants’ down breakouts are more effective on declining trend volumes. As we can see, the trend volumes for AXS have been on a plunge during the formation of the current pennant.
So, a close robust close below the lower boundary of the Pitchfork would expose AXS to a potential downswing. The bears would aim to test the $16-18 range before any bullish comeback opportunities. Considering its high correlation with Bitcoin, AXS could ditch its bearish structure if the king coin registers a sudden uptick in its gains.
The RSI’s equilibrium has flipped itself back into resistance mode after the sellers visibly exhibited their edge in the current structure. Should the bulls hold the 41-mark support, AXS could see an extended squeeze phase on its chart.
With the -DI looking north yet again, the near-term bullish recovery prospects seemed relatively slim. Besides, the ADX depicted a weak directional trend for the altcoin.
In light of the bearish pennant alongside the declining trend in volumes, the chances of a down breakout were high. In this case, the traders should watch out for testing supports in the $16-zone.
However, it becomes vital to note that the altcoin shares a 94% 30-day correlation with Bitcoin. Thus, keeping an eye on Bitcoin’s movement would be essential for making a profitable move.