Avalanche (AVAX) has been on a bearish trend in the last 4 hours before support was established at the intra-day low of $52.60. However, bullish momentum nullified the bearish rally, soaring the price to an intra-day high of $54.61 before facing resistance. At press time, AVAX was trading at $54.24, a 0.82% surge from the support level. Moreover, during the rally, AVAX’s market capitalization and 24-hour trading volume surged by 0.85% and 1.56% to $20,482,469,892 and $453,596,417, respectively.
AVAX/USD 24-hour price chart (source: CoinMarketCap)
AVAX Faces Resistance Amidst Bearish Momentum
Despite the recent surge in price, Avalanche (AVAX) is encountering significant resistance levels, hinting at a potential continuation of the bearish trend. The cryptocurrency has struggled to break through critical resistance zones, particularly in the range between $51 and $56. The failure to overcome these obstacles suggests a prevailing bearish sentiment in the market.
The bearish divergence observed on the weekly chart further reinforces the notion of a potential correction in AVAX’s price. This divergence, characterized by higher highs in price accompanied by lower highs in both the Relative Strength Index (RSI) and the Awesome Oscillator (AO), often indicates weakening bullish momentum and precedes corrective movements.
Potential Buying Opportunities and Key Support Levels
Despite the prevailing bearish sentiment, there are opportunities for long-term buyers to accumulate AVAX at favorable levels. The immediate imbalance zone, ranging from $45 to $50, serves as a crucial accumulation area. Historically, dips into this level have generated significant buying pressure, propelling AVAX to break through resistance zones and retest critical hurdles, such as the $80 mark.
AVAX/USD price chart (source: TradingView)
However, a breach below the $45 to $50 imbalance zone would signal general weakness in the market and could lead to further downward pressure on AVAX’s price. In such a scenario, the cryptocurrency may encounter strong support at the $40 level. Nevertheless, a decisive break below this support level could invalidate the bullish thesis, potentially triggering a more pronounced sell-off and pushing AVAX toward the next key support level at $28.
The sentiment among AVAX investors is mixed, with indications of both bullish and bearish expectations for the cryptocurrency’s price trajectory. According to data from Coinglass, the Long/Short Ratio for AVAX currently stands at 0.95, suggesting a predominantly bearish sentiment among traders.
Furthermore, the Global In/Out of Money (GIOM) metric highlights the potential impact of market movements on investor holdings. Approximately 22 million AVAX tokens, valued at over $1 billion, were bought between $51 and $56. Consequently, a decline below the $51 support level could lead to losses for these investors, exacerbating selling pressure in the market.
