Avalanche [AVAX]: The road to a new ATH might begin with this
Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be taken as investment advice
AVAX had to negotiate past a bearish pattern to continue pacing within an uptrend. Buyers would be looking to hold ground above $61 as sellers ease their grip over the market. A hike above 27 September’s swing high of $72.7 would confirm a bullish breakout from the pattern and help fuel a new ATH.
With the broader market also showing signs of improvement, sellers only have a small window to trigger a decline.
At the time of writing, AVAX was trading at $66.3, down by 3% over the last 24 hours.
AVAX 4-hour Chart
Source: AVAX/USD, TradingView
An impulsive wave that carried AVAX from $30.8 to $79.7 had come to an end as the price took shape within a descending triangle. After two unsuccessful attempts to punch below the baseline, a third assault looked likely over the coming sessions.
A break below $61.3 would allow bears to run through the defenses present at $60 and $57 and the strongest chances of a rebound would be between $48.5-$50. Overall, this pointed to a 20% decline from AVAX’s press time level.
To negate this outcome, AVAX needs to shield the $61-level from another breakdown attempt. A counterattack above $72.7 would even force a bullish breakout from the pattern. The lack of strong resistance levels above $70 would play in favor of the bulls and a double top at $77.6 is all that would stand in the way of a new ATH.
Reasoning
The Relative Strength Index remained subdued below 50 as downwards pressure continued to be a force in the market. However, the Squeeze Momentum Indicator suggested that sellers were easing control as the red bars diminished towards the half-line.
The MACD even offered an early buy signal after picturing a bullish crossover below the equilibrium level.
Conclusion
Even though AVAX was trading within a bearish pattern, sellers were running out of time to enforce a breakdown. Instead, bulls would have the upper hand if AVAX keeps a leg above $61. A breakout in the opposite direction would even see AVAX take aim at a new ATH.
Traders can long this pattern once AVAX closes above 27 September’s swing high of $72.7 on strong volumes. On the other hand, short-sellers can take positions if AVAX dips below the $61-mark.
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Saif Naqvi, Khareem Sudlow
