Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
- Avalanche had a higher timeframe bearish structure since June.
- If a move below $10 begins, a drop to $6.5 and lower would be likely over the rest of the year.
Avalanche [AVAX] has a strong bearish outlook on the higher timeframe charts. It saw a sharp decline in June, reaching the $10 psychological level. Although AVAX bounced toward $16 a month later, it was not enough to flip the higher timeframe bias bullishly.
Read Avalanche’s [AVAX] Price Prediction 2023-24
Over the past six weeks, Avalanche has retraced these gains. The bulls must defend the $10 region or face another drop that could measure as much as 40%. Some demand has tricked into the market over the past three days, but will it be enough?
Avalanche bears are heavily favored as per the 1-day price chart
AVAX has been in a downtrend since the latter half of April. The market structure has also been bearish for the most part since then. It was bullish in late June when AVAX flipped $13 to support and raced to the $15.97 mark.
Yet, the bulls were unable to force a daily session close above $14.93, the high that preceded the sharp fall in June. This meant the higher timeframe (1-week) market structure remained bearish.
After 15 July Avalanche embarked on a journey southward that was yet to be halted. It registered a new low for 2023 at $9.71, thus outlining the intense bearish sentiment in the market. Alongside the price, the OBV was in decline as well, which showed the steady selling pressure on the token.
The RSI also noted a bearish trend over the past month and signaled hefty downward momentum in the past week.
The 4-hour chart showed that the $10.47 was a level to watch out for. A move above this resistance would flip the structure bullishly on H4 and could be the beginning of recovery. Yet, as things stand, a move to the $10.45-$10.55 area would likely present a shorting opportunity for AVAX traders.
The rise in Open Interest and demand in the past few days gave bulls some hope
On 23 August, the Open Interest began to creep higher as prices bounced from the $9.8 area. Even though the lower timeframe structure remained bearish, the OI has risen slightly according to Coinglass.
This increase in OI was accompanied by the spot CVD moving higher by a small margin. It indicated spot buyers in the Avalanche market. The funding rate has been negative over the past week, but saw a move back above 0 in recent hours.
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Despite the lower timeframe optimism, it remained unlikely that AVAX could breach the $10.55 resistance based on the evidence at hand.
To the south, the Fibonacci extension levels at $8.59 and $6.31 could serve as support. The $6.31 was close to the $6.42 level of significance from January 2021 and could be a place where the Avalanche bulls find their feet.