Avalanche (AVAX) rose 0.5% to $ 31 on May 23, but the AVAX price is still fixed within a trading segment that looks like a “bear whirl”.
Avalanches could have buried technical equipment
Bear Penants are a bearish sequel, ie. they dissolve after the price breaks out of them and then fall – as a rule of technical analysis – by as much as the height of the previous downtrend, also called the “flagpole.”
AVAX is approaching a technical breakdown as its price moves towards the top of the pen, i.e. the point where its upper and lower directions merge.
This paints a bearish target for the AVAX / USD pair at $ 11.50 in June 2022, down 65% from today’s price, as shown below.
AVAX price: main support levels
On the other hand, the AVAX breakdown setup towards $ 11.50 could fall short due to certain key support areas.
For example, the volume format of the Avalanche symbol shows that it traded close to its control point (POC) – the level where traders have been most active since 2021 – around $ 32.
Interestingly, the step played a major role in limiting AVAX’s downsizing in the August-September 2021 meeting; it was ahead of the 390% bull run, which saw AVAX reach its peak, around $ 150, in late November 2021.
The POC level also served as a median in the compression trend seen between January 2021 and May 2021. Now it remains as a value floor even while AVAX looks at the breakdown of bear guinea pigs, as discussed above.
At the same time, creating a Fibonacci retracement graph from $ 2.75-swing low to $ 97.50-swing high shows AVAX merging between 0.618 Fib line (near $ 40) and 0.786 Fib line (around 23), as shown is below.
This increases Avalanche’s chances of retesting $ 23 in support, followed by a rebound towards $ 40. Such a measure would risk invalidating the installation of a bear vulture.
Today, Avalanche trades almost 78% below its record high, around $ 150, a burden of strong bearish sentiment elsewhere in the cryptocurrency market in a higher interest rate environment.
In addition, the recent collapse of the Terra ecosystem has also highlighted lower prices for AVAX and other cryptocurrencies.
– Watcher.Guru (@WatcherGuru) May 22, 2022
But the worst is yet to come if AVAX continues to evolve in line with the top cryptocurrency Bitcoin (BTC) and in turn its international risk groups, such as Nasdaq. The correlation coefficient between Avalanche and Nasdaq was 0.91 on May 23, which shows that they have been at an almost perfect pace.
Related: Bitcoin bottom ‘not yet reached’ warns analyst as BTC price holds $ 30K
On a brighter note, AVAX shows a promise of a tentative amount with a discrepancy between the rising relative strength index (RSI) and falling prices, according to Scott Melker, an independent market analyst.
“There is a potential bullish difference with a surrendered RSI per tonne of daily altcoin tablets,” Melker said, adding:
“Definitely needs an elbow up the RSI, but I still think we’re been bottoming out here in the markets … for now.”
The views and opinions expressed herein are those of the authors only and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading business involves risk, you should conduct your own research when making a decision.
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