The price of Avalanche (AVAX) has confirmed the previous long-term support as resistance. The downward momentum is likely to continue in the near future.
Long-term support
The price of Avalanche (AVAX) dropped below the long-term support at $10.7 in the week of August 21 to 28 and confirmed it as resistance in the following week (red arrows).
This is an extremely bearish signal as it invalidated a potential double bottom pattern (green arrows). The double bottom is a bullish pattern so invalidating it creates a bull trap and is often followed by sharp declines.
The weekly RSI has also broken below a significant bullish divergence line and is trending downwards, supporting the continuation of the bearish trend.
Therefore, the AVAX price is likely to continue its decline towards the next significant support level at $4.7, which is more than 50% lower than the current price.
Short-term outlook
The daily chart also presents a very pessimistic outlook. This is because the AVAX price has broken down below the minor support at $9.7 and invalidated the bullish divergence in the daily RSI indicator.
This incident has triggered stop-loss orders and may lead to a Long squeeze.
Conclusion
The most likely scenario suggests that the AVAX price will continue to decline in the near future, with a potential target for this move being the $4.7 level.
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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