The broad based sell-off in crypto assets continues this week, bringing one of the recent layer-1 darlings back to a strong area of interest. Will Avalanche (AVAX) sellers finally take profit and let buyers back in the game?
Avalanche (AVAX) to Break Technical Support Area?
We mentioned back in November that AVAX/USD didn’t appear to be done bottoming out after the pair topped out just under the $150 handle and dipped back below $120 in a couple of sessions. The stochastic still showed overbought conditions and after a massive rally that started in the Summer at around $10, there was likely more profit taking ahead.
Well, it looks like more profits were definitely taken, especially as broad risk sentiment shifted negative since that post, mostly due to the rise of the Omicron variant and its potential affects on the global economy. This brought back a high degree of uncertainty and risk aversion behavior to the markets, especially in crypto, at a time where we saw new all-time highs around the space.
AVAX/USD actually has been in the dumps since then, making its way down to the $75 – $80 area, a previous resistance-turned-support handle which intersects with a rising ‘lows’ pattern. This is a set of patterns that may draw in technical players, so its one to watch for bullish reversal patterns if you’re fundamentally bullish on the Avalanche Network (i.e., focusing on its rapid ecosystem and total value locked growth, Ava Labs chosen for Mastercard’s crypto program, etc.).
Of course, there is a good chance that this area will not hold if Omicron and macro economic fears continue to be the main market focus. If these fears persist and/or we get negative comments on the global economy from this week’s central bank events, then it’s possible that this area will break as well as traders rush into safe havens like the U.S. dollar.
If so, we may see AVAX/USD touch the next major support area around the $55 handle, a possible scenario in a week given the weekly average true range of around $21. If that plays out, then that area will be one to watch as it was the previous all-time high hit back in February.
What do you all think? Can AVAX bulls hold the line here around $75 – $80? Or is the next price dump right around the corner? Let me know in the comments section below!
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