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The Avalanche (AVAX) price action showcases a bull cycle gaining momentum within the falling parallel channel in the daily chart. The reversal rally surpasses the overhead resistance trend line indicating a breakout spot. However, the higher price rejection in the breakout candle warns of a bearish setback. So should you consider buying into this breakout?
Key points:
- The AVAX jumps from $14.50 support with a tweezer bottom candle
- The AVAX price action gives the bullish breakout of the falling channel pattern.
- The intraday trading volume in AVAX/USD is $541.5 Million, indicating a 10.2% fall.
Source- Tradingview
The AVAX/USD price chart shows a downtrend in a falling channel pattern after the massive supply dump in May. The falling channel pattern forms after the $36 fallout resulting in a dip to the $14.50 mark, accounting for a 60% depreciation last month.
However, AVAX buyers quickly overtook trend control to invest at such high discounted rates resulting in a bullish reversal. As a result, the positive cycle within the bearish channel surpasses the overhead resistance trendline leading to a bullish breakout.
Today, the coin price inflated by 3.82%, propelling the breakout candle above the resistance trendline. So if the buying pressure sustains over the weekend and breaks the 20-DMA trendline, the buyers may drive the AVAX price 45% higher to $30.
However, until AVAX buyers overcome the higher price rejection, traders must wait for a price action confirmation to avoid a bull trap.
Technical indicator
The DMI indicator shows the DI lines ready for a bullish crossover, adding points to the bullish trend reversal possibility. Moreover, the falling momentum of the bearish trend is evident in the reversing ADX Line.
The bullish reversal exceeds the dynamic resistance of the 20-DMA (yellow line). Thus, this breached EMA should act as viable support for further recovery.
- Resistance levels: $21.8 and $27
- Support levels: $75.6 and $50
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