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For nearly two and half months, the AVAX/USDT pair railed within a broadening wedge pattern of the daily time frame chart. Following this pattern, the short-term recovery in this coin reached and formed a local top at the $30 mark. Furthermore, the bearish reversal from this resistance amid the US Fed hint at the increasing interest rate in September caused a significant correction rally.
Key points from AVAX analysis:
- The AVAX price losing the 0.618 FIB will indicate weakness in bullish momentum
- The daily-RSI slope dives deeper into bearish territory, supporting the extended correction theory.
- The intraday trading volume in Avalanche coin is $442.4Million, indicating a 5.17% gain.
Source- Tradingview
In theory, this bearish continuation pattern accelerates the selling pressure once the price breaks the ascending support trendline. Thus, on August 26th, the broader market witnessed a strong sell-off which bolstered sellers to breach the pattern’s support trendline.
So far, the AVAX price has plunged to the $20 mark, registering a 33.4% loss in the past two weeks. However, this psychological level aligned with the 0.618 Fibonacci retracement level offers a strong confluence launchpad to bolster bullish reversal.
However, a possible reversal may act as a retest phase to channel breakdown and will surge the prices 12% higher to hit the breached trendline at $22. If the retest candle sustains below the trendline, the interested short sellers could grab a good entry opportunity.
The post-retest downfall will pull the AVAX price below the $20 mark and extend the ongoing correction another 20% lower, and hit the $16 mark.
On a contrary note, if the altcoin jumps above the flipped resistance trendline during the retest phase, the bearish thesis will get invalidated.
Technical Indicators
Vortex indicator: the wide gap between the VI+ and VI- slope in a bearish alignment indicates the bear poses trend control.
EMAs: a bearish crossover among the 20-and-50-day EMA may attract more sellers to continue the price fall to $16. Moreover, these breached EMAs should offer viable resistance to maintain a bearish trend.
- Resistance levels: $22.16 and $26.2
- Support levels: $20 and $16
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