Avalanche gets near key breakdown level that may sink AVAX cost by another 65%

Avalanche (AVAX) acquired .5% to achieve over $31 on May 23 but AVAX cost remains trapped in the buying and selling range that seems just like a “bear pennant” structure.

Avalanche might get hidden technicals 

Bear pennants are bearish continuation patterns, i.e., they resolve following the cost breaks from these to the down-side and then—as a guide of technical analysis—falls up to the peak from the previous downtrend, also known as “flagpole.”

AVAX is nearing a technical breakdown since it’s cost moves toward the pennant’s apex, i.e., the stage where its lower and upper trendlines converge.

This paints the bearish target for that AVAX/USD pair at $11.50 by June 2022, lower about 65% from today’s cost, as proven below.

AVAX/USD daily cost chart featuring ‘bear pennant’ breakdown setup. Source: TradingView

AVAX cost: key support levels

On the other hand, AVAX’s breakdown setup toward $11.50 could fell short because of certain key support areas.

For example, the Avalanche token’s volume profile shows it buying and selling near its reason for control (POC)—the level in which the traders were most active since 2021—around $32.

Interestingly, the amount was instrumental in capping AVAX’s downside attempts within the August-September 2021 session it preceded a 390% bull run, which saw AVAX reaching its record a lot of around $150 at the end of November 2021.

AVAX/USD daily cost chart featuring volume profile. Source: TradingView

The POC level also offered like a median throughout the consolidation trend observed between The month of january 2021 and could 2021. Now, It holds like a cost floor even while AVAX eyes the bear pennant breakdown, as discussed above.

Meanwhile, developing a Fibonacci retracement graph from AVAX’s $2.75-swing low to $97.50-swing high shows AVAX consolidating between its .618 Fib line (near $40) and .786 Fib line (around 23), as proven below. 

AVAX/USD weekly cost chart featuring Fib support and resistance levels. Source: TradingView

That raises Avalanche’s chance of retesting $23 as support, adopted with a rebound move toward $40. This type of move would risk invalidating the bear pennant setup.

Essentially bearish

Today, Avalanche trades nearly 78% below its record a lot of around $150, burdened with a strong bearish sentiment elsewhere within the crypto market inside a greater rate of interest atmosphere.

Additionally, the current Terra ecosystem meltdown has additionally stressed the costs of AVAX along with other cryptos lower.

However the worst continues to be yet in the future if AVAX continues trending synchronized using the top crypto Bitcoin (BTC) and, consequently, its global risk-on counterparts, for example Nasdaq. The correlation coefficient between Avalanche and Nasdaq was .91 by May 23, showing they have been relocating near-perfect tandem.  

Related: Bitcoin macro bottom ‘not in yet’ warns analyst as BTC cost holds $30K

Around the better note, AVAX shows commitment of an interim upside scenario having a divergence between its rising relative strength index (RSI) and falling prices, based on Scott Melker, a completely independent market analyst.

AVAX/USD daily cost chart showing bullish divergence. Source: Scott Melker/TradingView

“You will find potential bullish divergences with oversold RSI on a lot of daily altcoin charts,” stated Melker, adding:

“Need definitive elbow on RSI, however i still think we’ve been bottoming here across markets…. for the time being.”

The views and opinions expressed listed here are exclusively individuals from the author and don’t always reflect the views of Cointelegraph.com. Every investment and buying and selling move involves risk, you need to conduct your personal research when making the decision.

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