Avalanche price might need to drop 5% to 10% before AVAX bulls eye retest of $80
- Avalanche price shows signs of exhaustion as it approaches the $51 to $56 resistance zone.
- The bearish divergence developed on the weekly chart forecasts a potential correction.
- The immediate imbalance, extending from $45 to $50, is a good level for long-term buyers to accumulate.
- Invalidation of the bullish thesis will occur on the flip of the $39 support floor into a resistance level.
Avalanche (AVAX) price has been struggling to overcome a critical resistance zone for three weeks now. Considering Bitcoin’s slowdown and sell signs, a potential correction might be due for AVAX in the short term.
Also read: Bitcoin back above $67K as Memecoins push up SOL and AVAX
Avalanche price to provide buying opportunities
Avalanche price overcame the $40 psychological level in late December but rebalanced the $22 to $31 imbalance, allowing sidelined buyers to accumulate. As a result of this buying pressure, AVAX shot up 140% in the under two months.
Between late December and mid-March, Avalanche's price set a higher high. However, the Relative Strength Index (RSI) and the Awesome Oscillator (AO) formed lower highs. This non-conformity is termed bearish divergence and often results in corrective moves for the underlying asset.
In this case, Avalanche price has already shed 19% from the recent local top of $65 and is likely to shed more weight. The immediate imbalance, extending from $45 to $50, is the first accumulation zone, which is roughly 5% to 10% away from the current level of $53.
If history repeats, a dip into this level should generate enough buying pressure to shatter through the $51 to $56 resistance zone and retest the next critical hurdle at $80. This level is the midpoint of the previous bearish market for AVAX.
Read more: Altcoins that show strength during Bitcoin price decline: JUP, SEI, AVAX, GALA and SUI
AVAX/USDT 1-week chart
On the other hand, if Avalanche price continues to dip beyond the $45 to $50 imbalance, it would denote a general weakness in the market. In such a case, AVAX will encounter the weekly support level at $40.
If there is a massive spike in selling pressure that pushes Avalanche price to flip the $40 level into a resistance level, it would invalidate the bullish thesis. Such a development could see AVAX crash 28% and tag the next key support level at $28.
Read more: Avalanche Foundation’s meme coin investments are underwater, AVAX price sees 36% weekly gains
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Author
Akash Girimath
FXStreet
Akash Girimath is a Mechanical Engineer interested in the chaos of the financial markets. Trying to make sense of this convoluted yet fascinating space, he switched his engineering job to become a crypto reporter and analyst.
