Overview of Avalanche’s Price Movement
On the brisk spring day of May 23, Avalanche (AVAX) found itself climbing a modest 0.5% to surpass the $31 mark. But don’t grab your party hats just yet, as AVAX is stuck in what traders might call a “bear pennant” structure. Think of it as a sad little flag, waving goodbye while headed down, down, down.
The Bear Pennant Explained
A bear pennant is a bearish continuation pattern, which means that once AVAX bids adieu to this price range, it’s likely to plummet further. The technical analysis suggests that after emerging from the confines of this pennant, prices could fall by as much as the height of the previous downtrend—commonly referred to as the “flagpole.” The ominous target? A chilling $11.50 by June 2022, a steep 65% drop from May 23’s price.
Key Support Levels Holding Steady
However, before you start drafting your eulogy for AVAX, there’s a glimmer of hope. Avalanche’s trading history shows a point of control (POC) around the $32 mark. This POC has been a fortress of sorts, holding firm during turbulent times—just like that one friend who shows up with ice cream after a breakup. Back in late 2021, it served as a launch pad for a wild ride that sent AVAX soaring to a record high of about $150!
Fibonacci to the Rescue?
Fibonacci retracement levels also throw some shade on the situation, showing AVAX dancing between the 0.618 Fib line (around $40) and the 0.786 Fib line (approximately $23). This technical jigsaw puzzle creates potential for a bounce back if it retests $23 support, meaning we could see AVAX find its footing before venturing downwards.
Market Sentiment: A Rollercoaster Ride
As of late May 2022, Avalanche sits 78% below its all-time high, weighed down by a gloomy market outlook. The Titanic meltdown of the Terra ecosystem didn’t do any favors either, costing the company a staggering $60 million according to recent reports. The crypto market’s bearish undertones are palpable, reminiscent of a bad breakup during prom season.
Correlation with Bitcoin and Nasdaq
AVAX’s correlation with Bitcoin (BTC) and Nasdaq sits at a staggering 0.91. If Bitcoin takes a nosedive—spoiler alert, it probably will—AVAX will likely follow suit. It’s as if they were joined at the hip during a particularly turbulent dance-off.
Looking for Silver Linings
But it’s not all doom and gloom. There might be a ray of sunshine peeking through with some bullish divergences in the relative strength index (RSI). Independent market analyst Scott Melker notes these divergences could hint that AVAX is prepping for a rebound. This is akin to spotting a flicker of hope during a Netflix drama, where you just know the hero will rise again. “Need definitive elbow up on RSI,” says Melker, “but I still think we have been bottoming here across markets…. for now.”
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