AVAX price recovery to $20 is dependent on these factors
- AVAX price approaches a bullish breaker, extending from $12.44 to $14.43, increasing its chances of a trend reversal.
- The chances of a recovery rally, while high, are still at the mercy of Bitcoin movements.
- A decisive flip of the $12.44 support into a resistance level will invalidate the recovery thesis.
AVAX price has been in a consolidation phase for nearly a year with no end in sight. As the altcoin approaches the lower limit of this range, there are two ways Avalanche might resolve the tightening - a recovery bounce or a breakdown that leads to a steep correction.
AVAX price at critical level
AVAX price formed the $13.71 to $30.82 range between June 2022 and August 2022. Since then, the Avalanche has been hovering below the range’s midpoint at $22.26 with multiple failed attempts to overcome it.
The last two failed attempts in January 2023 and April 2023 set AVAX price on a downtrend. So far, the altcoin has shed 31% from its local top at $21.58. Interestingly, there is a strong confluence made of the range low at $13.71 and the Bullish Breaker, extending from $12.44 to $14.43, present to absorb the incoming selling pressure.
A Bullish Breaker is characterized by the formation of an upward candlestick between two lower lows.
The last time AVAX price tagged this breaker, it triggered a 46% ascent. Although the buying pressure might have reduced, the chances of another bounce are high. The targets for this recovery rally include $21.36, followed by the range’s midpoint at $22.26.
This move would constitute a 51% ascent, but here are a few constraints that need to hold for this rally to occur:
- The range low and the Bullish Breaker confluence, extending from $12.44 to 14.43, needs to be defended.
- Bitcoin price should not trigger a sudden spike in selling pressure.
While a 51% move is highly unlikely considering the current market conditions, investors can focus on a lower timeframe target at $16.46. If AVAX price manages to hold above this level and creates a string of higher highs in doing so, the chances of an extension of the recovery rally would be heightened.
AVAX/USDT 1-day chart
On the other hand, if the selling pressure takes over, pushing AVAX price to produce a three-day candlestick close below the Bullish Breaker’s lower limit at $12.44, it would break investor confidence. If this move flips the $12.44 level into a hurdle, it would invalidate the recovery thesis and attract more sellers, potentially triggering a sweep of December 30, 2022, swing low at $10.53.
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.
