Avalanche (AVAX) Price Plummets From Yearly High, Where Will It Find Support?
The price of Avalanche (AVAX) has formed a significant bearish pattern and broke down below the nearest horizontal support zone. It is expected to correct deeper in the near future.
The price of Avalanche (AVAX) dropped after hitting a yearly high of $50 on December 24, 2023. This high was slightly lower than the long-term resistance zone at $54.
In the week from December 25 to 31, 2023, the price of AVAX plummeted and formed a bearish engulfing pattern (red ellipse). This is a bearish pattern, usually appearing at the end of an uptrend.
Indeed, two candles with long upper wicks in the next two weeks confirmed this. It shows that the price of AVAX has formed a local top and a deep correction is underway.
The weekly RSI dropped below 70 and is sloping down, indicating that the bulls have lost control.
Therefore, the price of AVAX is likely to continue to correct to the previous horizontal resistance zone at $22-$24, corresponding to a 24.14% decrease from the current price.
Since this zone coincides with the 0.618 Fib retracement level of the entire upward move, it is likely to provide a bounce when the price reaches it.
Breaking the nearest horizontal support
The daily chart shows that the price of AVAX has formed a bearish structure since the aforementioned local high.
Yesterday, the price confirmed the previous horizontal support zone at $34 as resistance (red arrow), marking the continuation of the previous downtrend.
The daily RSI cut below 50 and is sloping down, indicating that the bears have regained control in the short term.
Therefore, the price of AVAX is likely to drop to the $22-$24 zone in the next few days.
The most likely outlook suggests that the price of AVAX will continue to correct in the near future. The potential target for this decline is $22-$24.
The bearish view will be invalidated if the price breaks above the recent high at $41.94.
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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