Understanding the ‘Double Bottom’ Reversal Pattern

The Avalanche (AVAX) token seems to be flirting with a classic bullish reversal pattern known as the ‘double bottom.’ This charming setup flirts with traders, promising potential gains if it performs its intricate dance correctly.

What is a Double Bottom?

Picture this: the price hits a low, bounces back, corrects at a resistance level, retreats to a support it previously established, and then—like a cat with nine lives—bounces back! Sounds dramatic? Well, it is! This pattern indicates that a security might be ready to achieve breakout glory, and AVAX is carefully strutting along this path.

The Technical Breakdown of AVAX

Since May 27, AVAX has been practicing its moves, showcasing the steps of a double bottom formation. Specifically, in the four-hour chart, the AVAX/USD pair has hit the support level at around $22.25 not once, but twice! Now, it eyes a breakout above the resistance, known affectionately as the ‘neckline,’ at approximately $27.50.

The Breakout Dreams

If AVAX decides to break out above $27.50 with enough trading volume, it could target a price around $35. That’s a potential 30% increase from its June performance. Talk about a summer romance!

The Bearish Scenario: It’s Not All Sunshine and Rainbows

However, before you whip out your celebratory confetti, let’s talk about the flip side. Currently, AVAX is trading nearly 82% below its all-time high of about $151, which was reached in November 2021. Since this correction started, AVAX has casually strolled through various consolidation channels, extending its downtrend.

Beware the Descending Triangle

When we examine the daily timeframe, a descending triangle pattern emerges, looking every bit like a dark cloud looming over its bullish aspirations. This formation is a continuation pattern, and if AVAX ventures downwards through this channel, there’s a potential that it could plunge to around $13.25, nearly 50% off from June 6’s price!

Conclusion: The Dance Continues

The journey of AVAX is akin to a dramatic performance with unexpected twists and turns. Whether it leads to a breakout party at $35 or a sobering retreat towards the depths of $13.25 remains to be seen. So, strap in, folks! As with all trading endeavors, proceed with caution, do your due diligence, and keep your emotions in check while dancing with the markets.

“Every investment and trading move involves risk, you should conduct your own research when making a decision.”