Crypto volatility is on the rise in the start of the new week, so we’ll take a quick technical look at a couple of the big dogs in the space for potential setups if the action stays hot.
The last time we looked at Avalanche (AVAX), we saw the dip from then fresh all-time highs under the $80 handle on AVAX/USD to roughly $52 at the time of the post.
At the time, we thought this was a broad crypto market induced dip and that the fundamentals of AVAX were strong enough to potentially draw in buyers, possibly in between the $40 – $50 area.
Since then it looks like that $52 was the bottom because not too long after than, AVAX/USD took off like a rocket ship, with short-term hurdles around the major psychological levels of $70 and $80 before popping above the $90 today.
That’s a 50% move just in the first week of November, and with the $100 psychological level straight ahead, the question now is whether or not the market wants to push higher or take profits from here?
Of course we don’t know, but we think that there’s a chance some risk conscious traders will take profits, and that the technicals (overbought Stochastic signal?) and psychological level may draw in technical sellers.
In that scenario, a pullback to the minor support areas and rising trendline is something to watch out for, and bullish candle reversal patterns there may draw in both fundie and technical bulls, both long and short-term if AVAX’s fundies remain positive.
Terra (LUNA) didn’t quite have the same bullish runup so far in November (up 26% and up 34% since we pointed out potential support area), but it’s made an interesting technical pattern on both the long and short-term charts, roughly what could be considered a rising wedge or ascending triangle.
The $50 handle on LUNA/USD was a major resistance area in October, and now that it was broken this past week, can it hold as support and draw in more buyers into the uptrend?
Well, LUNA does have a potential volatility catalyst this week as the protocol is set to burn 10% of the supply of LUNA tokens to mint Terra U.S. Dollars needed for other Terra projects.
This information is not new so it’s likely priced in, which means it’s tough to tell which direction crypto traders may send LUNA next, but odds are pretty good that the market will move this week.
With fundamentals and price action still in favor of LUNA bulls, we think traders will look at dips as buying opportunities, making the rising trendline one to watch for bullish reversal patterns this week.
Also, a sustained break above the $53 handle may draw in momentum/technical buyers as well as profit taking sellers, so we’d wait to see clear direction in that scenario before considering what to do in the short-term.
What do you all think? Are AVAX and LUNA on your watchlists? Is AVAX a buy? Will there be more room to run or do you think these rallies will soon fade? Let me know in the comments section below!
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