Avalanche (AVAX) Price Could Surge 50% With Potential Bear Trap
The price of Avalanche (AVAX) has shown signs of price increase in both the long-term and short-term timeframes. It might create a bear trap and surge significantly in the near future.
Weekly Outlook
The price of Avalanche (AVAX) has been decreasing since reaching the yearly high at $23 in January 2023. During this period, the price broke below the long-term support zone at $10.7-$11 and confirmed it as resistance during the week of October 2-8 (red arrow).
This marks the continuation of the long-term downtrend, and the AVAX price is expected to decrease to the next support level at $4.5.
However, instead of doing so, the AVAX price formed a bullish engulfing pattern last week (green ellipse). This is a bullish pattern, indicating that the bulls bought aggressively at a lower price.
Although the weekly RSI is below 50, it has broken above the descending resistance line and is sloping upward. This shows that the long-term downtrend has weakened.
Additionally, such breakouts in the RSI often lead to similar breakouts in price action. Therefore, the prospect of AVAX price reclaiming the $10.7-$11 area is becoming clearer.
If successful, this would create a bear trap and could help AVAX price quickly rise to the next resistance level at $15, an increase of about 50% from the current price.
Breaking the Descending Resistance Line
The daily chart shows that the AVAX price has broken above a descending resistance line formed since April 18, 2023. The breakout occurred with a large bullish candlestick with above-average volume.
This indicates a valid breakout, and the previous correction phase has likely ended.
Furthermore, this breakout happened after the AVAX price formed a double bottom pattern. This is a bullish pattern that often appears at the end of a downtrend.
The daily RSI has formed a significant bullish divergence and is above 50, supporting the potential continuation of the uptrend.
Therefore, the AVAX price could rise to the nearest resistance level at $11 in the coming days.
Conclusion
The most likely scenario suggests that the AVAX price could rise to $11 in the coming days. Reclaiming this level could potentially help the price increase by 50% to the next resistance level at $15.
This outlook could be invalidated if the price breaks below the October 19 low at $8.70.
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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