The recent downturn in Avalanche’s (AVAX) value might present a favorable opportunity for a long position that could yield a potential gain of 12%. Nonetheless, this altcoin could also provide attractive prospects in both the short and long term.
From a more extensive viewpoint, AVAX, which is among the top 100 tokens by market capitalization, has not performed as well as many major tokens, showing triple-digit year-to-date returns.
This disparity could create a compelling opportunity if AVAX manages to reach its previous highs of $147 in 2021 or $65 by 2024.
Through analyzing past patterns, surpassing the $60 mark could pave the way for AVAX to reach $100, its high point in 2021.
Immediate AVAX Outlook
Upon closer examination of the 4-hour chart, AVAX’s retracement seemed to be nearing crucial short-term support levels.
Since late November, AVAX’s price decline has been supported by the trendline and the dynamic 50-day EMA (Exponential Moving Average).
If history repeats itself, a bounce from these levels could be anticipated, offering a profitable entry point for a long position around $49.7.
A drop below the high at $49.8 could serve as a stop loss to safeguard investments, meaning that falling below $48 would nullify the potential long position.
The short-term price momentum has dwindled, signaling a possible price reversal due to the oversold reading on Stochastic RSI.
Furthermore, the higher-than-average inflows, evidenced by the CMF (Chaikin Money Flow), support the anticipated upward price movement.
Liquidity Activity at the $50 Range
Recent market trends suggest that the mid-week shake-up was propelled by a search for liquidity. According to Coinglass, AVAX tapped into liquidity at $52 before descending to levels below $50 (highlighted in bright yellow) at current market conditions.
Given the lack of substantial liquidity beyond leveraged long positions at $49.8, any liquidation at these levels could prompt an upward reversal in AVAX’s trajectory.
Upward liquidity appears to be accumulating around the $54-$55 region, indicating a buildup of leverage in short positions, which could be the forthcoming target for liquidity sweeps.
The anticipated rebound, influenced by liquidity efforts from $49.8 to $54-$55, aligns with the long-term strategy, offering a potential 12% gain. However, a sustained decline below $48 would nullify the positive short-term outlook.
Disclaimer: The information shared does not constitute financial, investment, trading, or any advisory recommendations and solely reflects the writer’s perspective.