Why Avalanche might be set for another price slump
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
- Avalanche has a bearish market structure across higher and lower timeframes.
- The data showed that there was some support at $9.6 and a straight drop in prices might not be imminent.
Avalanche [AVAX] slid below the $10 support level a few hours before press time. A report from last week highlighted the strong bearish bias on the 1-day chart, and this outlook has not changed since.
Read Avalanche’s [AVAX] Price Prediction 2023-24
The lower timeframe price action showed selling pressure was strengthening. The psychological $10 support, which was also significant from a technical perspective over the past year, was breached.
An AVAX drop of more than 10% was beginning to take shapeIt was not a good time to be an Avalanche bull. The market structure on the daily and the 4-hour timeframes were bearish. The H4 chart showed a bullish order block at the $10 level, but since it was breached in recent hours, it was flipped to a bearish breaker. The red box showed that a retest of the $9.77-$10.06 and rejection would offer an ideal shorting opportunity.
A move above the $10.2 level would invalidate the bearish idea presented. To the south, the $8.59 was a target with a good likelihood of being hit. It represented the 23.6% Fibonacci extension level southward, with the levels plotted based on the rally from $10 to $15.97 in June and July.
The RSI was below neutral 50 and agreed with the market structure on the momentum side. The OBV saw a spike on 29 August but has retraced those gains, which showed the bulls were unable to sustain the pressure.
Books showed large buy orders at $9.6- what can traders expect next?Data from MobChart showed that there were limit buy orders amounting to close to $1 million from $9.6-$9.48. This suggested that AVAX could see a bounce at or just above those prices and hunt the liquidity to the north before another drop. One way or another, this wall of buyers could take some time to get exhausted.
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On 4 September the Open Interest rose slightly while the price dropped from $10 to $9.7. This showed short selling and signaled short-term bearish sentiment. The spot CVD also fell off a cliff in recent hours.
Therefore, based on the evidence it was safe to say that Avalanche prices are likely to go further south over the next week or two. Traders need not FOMO into positions but can wait for a move into areas of interest, such as the $10 breaker block, to assess trading opportunities.