Avalanche 'bull trap' risks pushing AVAX price down by 30% in February

1 month ago 26

The terms of AVAX has much than doubled successful 2023 but a increasing divergence betwixt respective cardinal metrics hints astatine a bearish reversal ahead.

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Avalanche 'bull trap' risks pushing AVAX terms  down   by 30% successful  February

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Avalanche (AVAX) bulls should brace themselves for interaction led by a increasing divergence betwixt severalkey indicators connected the daily-timeframe chart.

AVAX terms illustration paints bearish divergence

The regular AVAX illustration shows a classic bearish divergence betwixt its terms and comparative spot scale (RSI), a momentum oscillator forming since Jan. 11.

In different words, the terms of AVAX has been making higher highs since the said date. But, connected the different hand, the coin's regular RSI has been forming little highs. This divergence suggest a slowdown successful the  momentum of the AVAX/USD pair, which whitethorn pb to a terms reversal.

AVAX/USD regular terms chart. Source: TradingView

In addition, the declining volumes during the people of AVAX's ongoing uptrend besides hints astatine the aforesaid bearish cues.

The price-RSI and price-volume divergences look arsenic AVAX terms continues its 2023 uptrend . Notably, Avalanche has rallied by much than 100% year-to-date to $22.50 arsenic of Feb. 2, helped by improving risk-on sentiments and  news of its partnership with Amazon.

On Jan. 31, Avalanche partnered with Intain, a structured concern level that facilitates much than $5.5B successful assets crossed much than 25 deals to tally its integer marketplace IntainMARKETS via IntainMARKETS Subnet.

The terms of AVAX rallied astir 20% aft the announcement.

Avalanche terms risks driblet 30% successful February

AVAX's terms has successfully closed supra 2 cardinal absorption levels: a multi-month descending trendline (blacked) and its 200-day exponential moving mean (200-day EMA; the bluish wave) during the ongoing rally. 

AVAX/USD regular terms chart. Source: TradingView

Avalanche present eyes a breakout supra $22.75, which has been serving arsenic absorption since August 2022, for a imaginable breakout to $30 arsenic its adjacent upside target. This level besides coincides with the falling wedge breakout people discussed successful this analysis.

In different words, an astir 30% summation from the existent terms levels. 

Conversely, a pullback from the absorption level, fueled by the bearish divergence indicators discussed above, could nonstop AVAX terms toward its 50-day EMA (the reddish wave) astatine astir $15-$16, down astir 30% from existent prices.

This nonfiction does not incorporate concern proposal oregon recommendations. Every concern and trading determination involves risk, and readers should behaviour their ain probe erstwhile making a decision.

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