The cryptocurrency world’s 10th largest, Avalanche (AVAX), is showing signs of exhaustion as it approaches the resistance zone of $51 to $56. However, the downward trend seen in the weekly chart indicates a potential correction movement. Currently, with prices fluctuating between $50 and $60, it seems to be a suitable level for long-term buyers to accumulate. Yet, the weakening upward momentum and the possibility of the price returning to the $39 support level point to the invalidation of the bullish thesis. So, what levels should investors watch at this point?
Will Altcoin Avalanche (AVAX) Price Offer Buying Opportunities?
The cryptocurrency Avalanche (AVAX) surpassed the psychological level of $40 at the end of December. Between the end of December and mid-March, Avalanche’s price set a higher peak. However, the Relative Strength Index (RSI) and Awesome Oscillator (AO) formed lower peaks. This discrepancy is called a bearish divergence and often results in corrective movements for the underlying asset.
In this case, Avalanche’s price has retreated from its most recent local peak of $65, losing 19% in value and likely to fall further. The current imbalance ranging from $45 to $50 suggests the first accumulation zone is approximately 5% to 10% away from the current level of $53.
Where Buying Pressure May Emerge
If history repeats itself, a decline towards this level could generate enough buying pressure to break through the resistance zone of $51 to $56 and retest the next critical barrier at $80. This level is the midpoint of the previous bear market for the cryptocurrency AVAX.
On the other hand, if Avalanche’s price continues to fall beyond the $45 to $50 imbalance, it will indicate a general weakness in the market. In this scenario, the cryptocurrency AVAX could experience a pullback towards the weekly support level of $40.
What’s important is the possibility of a significant increase in selling pressure, which could turn the $40 level into a resistance level for AVAX’s price. Such a development could invalidate the bullish thesis and lead to a further 28% drop for the cryptocurrency AVAX, testing the next significant support level at $28. However, it should be noted that this scenario is unlikely to materialize at the moment.
