Avalanche nears key breakdown level that could sink AVAX price by another 65%

Avalanche (AVAX) gained 0.5% to succeed in over $31 on Could 23 however AVAX value stays trapped inside a buying and selling vary that seems like a “bear pennant” construction.

Avalanche may get buried technicals 

Bear pennants are bearish continuation patterns, i.e., they resolve after the worth breaks out of them to the draw back after which—as a rule of technical evaluation—falls by as a lot as the peak of the earlier downtrend, additionally known as “flagpole.”

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AVAX is nearing a technical breakdown as its value strikes towards the pennant’s apex, i.e., the purpose the place its higher and decrease trendlines converge.

This paints the bearish goal for the AVAX/USD pair at $11.50 by June 2022, down about 65% from right now’s value, as proven beneath.

AVAX/USD every day value chart that includes ‘bear pennant’ breakdown setup. Supply: TradingView

AVAX value: key help ranges

Conversely, AVAX’s breakdown setup towards $11.50 may fell brief on account of sure key help areas.

As an example, the Avalanche token’s quantity profile exhibits it buying and selling close to its level of management (POC)—the extent the place the merchants had been most lively since 2021—round $32.

Curiously, the extent was instrumental in capping AVAX’s draw back makes an attempt within the August-September 2021 session; it preceded a 390% bull run, which noticed AVAX reaching its record high of around $150 in late November 2021.

AVAX/USD every day value chart that includes quantity profile. Supply: TradingView

The POC stage additionally served as a median throughout the consolidation development witnessed between January 2021 and Could 2021. Now, It holds as a value flooring whilst AVAX eyes the bear pennant breakdown, as mentioned above.

In the meantime, making a Fibonacci retracement graph from AVAX’s $2.75-swing low to $97.50-swing excessive exhibits AVAX consolidating between its 0.618 Fib line (close to $40) and 0.786 Fib line (round 23), as proven beneath. 

AVAX/USD weekly value chart that includes Fib help and resistance ranges. Supply: TradingView

That raises Avalanche’s chance of retesting $23 as help, adopted by a rebound transfer towards $40. Such a transfer would threat invalidating the bear pennant setup.

Basically bearish

Immediately, Avalanche trades practically 78% beneath its document excessive of round $150, burdened by a powerful bearish sentiment elsewhere within the crypto market in the next rate of interest atmosphere.

As well as, the latest Terra ecosystem meltdown has additionally confused the costs of AVAX and different cryptos decrease.

However the worst remains to be but to come back if AVAX continues trending in sync with the highest crypto Bitcoin (BTC) and, in flip, its international risk-on counterparts, corresponding to Nasdaq. The correlation coefficient between Avalanche and Nasdaq was 0.91 as of Could 23, displaying that they’ve been transferring in near-perfect tandem.  

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

On the brighter observe, AVAX exhibits promise of an interim upside state of affairs with a divergence between its rising relative power index (RSI) and falling costs, in line with Scott Melker, an impartial market analyst.

AVAX/USD every day value chart displaying bullish divergence. Supply: Scott Melker/TradingView

“There are potential bullish divergences with oversold RSI on a ton of every day altcoin charts,” mentioned Melker, including:

“Want definitive elbow up on RSI, however I nonetheless assume now we have been bottoming right here throughout markets…. for now.”

The views and opinions expressed listed here are solely these of the writer and don’t essentially mirror the views of Cointelegraph.com. Each funding and buying and selling transfer entails threat, you need to conduct your personal analysis when making a choice.