Avalanche (AVAX) has created a bearish pattern. The long-term downtrend may be continued.
Double top pattern
The price of Avalanche (AVAX) has been in a long-term bearish trend since reaching its all-time high of $147 in November 2021. The decline led to a low of $10.7 in early January 2023. This low served to confirm the long-term support area at $10 and helped the price to rebound.
The price has since risen quickly and attempted two breakouts above the $21 resistance area. However, both attempts failed and a potential double top pattern is forming. This is a bearish pattern, which often leads to a continuation of the previous downtrend.
If so, the AVAX price could drop to the long-term support area at $10 once again, marking a decrease of over 40% from the current level. The weekly RSI indicator supports this possibility as it is forming a bearish divergence and is below 50.
Descending parallel channel
The AVAX price has been trading inside a descending parallel channel since reaching the yearly high of $22 on February 2. This is a bullish pattern, which often leads to a breakout in most cases.
Indeed, the price broke out of the pattern on April 16 and retested the $21 resistance area. However, this action turned out to be a fakeout as the price quickly fell back into the pattern. The nearest support area is found at $16, created by the horizontal support area and the middle line of the channel. The next support area is found at $14.
Since fakeouts often lead to strong moves in the opposite direction, the AVAX price may break the $16 support and retest the next support area at $14.
Conclusion
The most likely outlook suggests that the AVAX price could drop to at least $14. This view will be invalidated if the price breaks out above the $22 resistance area.
Disclaimer: Please note that this article is for informational purposes only and should not be taken as investment advice. As an investor, it is important to do your own research before making any decisions. We are not responsible for any investment decisions you make based on this information. Not Financial Advice.
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