In line with our previous analysis, the price of Avalanche (AVAX) has been trading sideways following a breakout from its previous upward channel. Recent price movements have been mixed, with buyers struggling to surpass key resistance levels.
Is there reason for concern among AVAX holders, or is there still potential for a breakout?
Is there a chance for AVAX bulls to reclaim lost ground?
Follwing a steady climb earlier in September, AVAX recently experienced a breakdown from its upward trajectory. Subsequently, its price has vacillated between $24 and $30. At the moment, AVAX is valued at $25.87, slightly above its support level.
The 20-day EMA stood at $26.80, while the 50-day EMA was at $26.48. The 20 EMA displayed a downward trend, hinting at a potential bearish crossover. Failure to break and sustain levels above these indicators could trigger increased selling pressure. Moreover, the 200-day EMA at $28.06 appeared as a significant hurdle that buyers must surpass to initiate an upward trend.
Crucial Levels to Keep an Eye On
Support Level: The critical support level lies at $24.47. A breach below this point could lead to further losses towards the $20 threshold.
Resistance Level: Immediate resistance can be seen at the 20-day EMA ($26.80) and the 50-day EMA ($26.48). A breakthrough above these levels might test the $28 resistance (200-day EMA) and subsequently the $31.37 mark.
At the time of writing, the Relative Strength Index (RSI) stood at 44.7, indicating a slight bearish momentum below the 50 mark. A move above 50 could instill confidence in buyers, while a drop below 40 may intensify bearish sentiment.
Insights from AVAX Derivatives Data
Derivatives data presented a mixed outlook for AVAX traders. Trading volume surged by 62.73% to $298.27 million, reflecting increased trading activity. Conversely, Open Interest decreased by 5.20% to $248.31 million, signaling dwindling trader confidence as positions were being closed.
Of note, the long/short ratio on major exchanges stood at 0.941, slightly favoring sellers. However, on Binance, the long/short ratio for AVAX/USDT was 2.3367, suggesting optimism among many traders regarding potential gains for the asset.
Traders are advised to exercise caution, closely monitoring overall market sentiment and the performance of leading cryptocurrencies like Bitcoin. These factors can wield considerable influence on AVAX’s trajectory in the immediate future. Vigilance over the 20-day and 50-day EMAs is recommended, as a bearish crossover could precipitate a return to the $20 range.