Avalanche (AVAX) Price Could Drop 20% in the Next Few Days, Here’s Why?
The Avalanche (AVAX) price has generated decisive bearish signals, indicating a potential further decline in the coming days.
The AVAX price decreased after touching a yearly high of $50 on December 24, 2023. This high is slightly below the long-term resistance zone at $54.
Currently, the price is in the process of breaking below the 20-day EMA, which has provided support during the upward movement since October 2023 (green arrows). Breaking below this line would confirm that the AVAX price has formed a local top, and a significant correction is likely to occur.
The daily RSI has created a significant bearish divergence within the overbought region and declined towards the 50 level. This indicates strong selling pressure, supporting the possibility of further decline.
Therefore, if today’s daily candle closes below the 20-day EMA, the AVAX price may decline to the next significant support zone at $30.8. This level is formed by the previous horizontal resistance zone and the 0.618 Fibonacci retracement level of the recent rally. This figure is approximately 20.62% lower than the current price.
Breaking the Short-Term Pattern
The 4-hour chart shows that the AVAX price has broken below an ascending parallel channel formed since December 11.
On December 29, the AVAX price confirmed the channel’s support line as resistance (red arrow), marking the beginning of a deep correction.
The 4-hour RSI has dropped below the 50 level and is sloping downward, showing that the bears are back.
Therefore, the 4-hour chart supports the prospect of a price decline from the daily timeframe, suggesting that the AVAX price will break below the 20-day EMA and decline further.
The most likely scenario indicates that the AVAX price will continue to decline in the coming days. The potential target for this movement is $30.8.
The bearish outlook may be invalidated if the price breaks above $42.15 and returns within the short-term channel.
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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