You are undoubtedly aware that cryptocurrencies are facing an unprecedented macroeconomic situation. The surge in inflation and the increase in interest rates by central banks are undermining investors’ appetite for risk-on assets. In this context, cryptocurrencies are on the sidelines and have been experiencing a range period for several months. AVAX is in no way spared, what about the evolution it has experienced in recent weeks? Could it bounce back by the end of the year? In this new Monday analysis, discover the scenarios to consider on the native token of the Avalanche blockchain.
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AVAX on an icy surface even before winter
After a all time high at 147 dollars during the month of November 2021, AVAX has not stopped falling since, like the market. The first acceleration took place during the break of the oblique support in April (first red circle). Having bottomed out at $13.71 in June, AVAX now evolves in a range. This is delimited by the resistance at $30.89 and the support at $15.40/$16.10. By the way, it is important to note that the support has been holding the price for several months. However, the more often it is touched, the more it will become fragile. Thus, what would happen in the event of a break of the weekly support within the framework of a new bearish leg for the cryptocurrency market?
A return to support below $9.33 is possible, it is a level where the price of AVAX has rebounded twice. Not having had a lot of trading volume between the current support and this level, a comeback could happen quite quickly in the space of a few days. However, as long as there is no weekly closing below this level as well as an acceptance of the price, nothing is confirmed yet.
Conversely, is it possible to have a rebound of AVAX on the financial markets? You can see that in August, AVAX operated a bearish rejection on the 13 EMA (second red circle). In order to hope for a rebound of a good amplitude, the EMA13 confluence and the 50% Fibonacci retracement will have to be regained. In this context, the conditions would be met for a rebound which could seek EMA25 or even 32 which are confluent with the top of the range on AVAX.
What are the levels to monitor in the event of a rebound?
On a smaller time scale, we can better perceive price fluctuations. We can see that the POC was recently lost, it still has not been recovered. For buyers, the objective is clear: resume this level at $16.20 which is in confluence with the trio of EMA (precisely the EMA 25). If AVAX gets there, it will probably fetch the top of HNV which is located at about $17.47. It is here that the first resistance to overcome after the POC is located. A bullish breakout of this level would allow reverse the downtrend on the daily scale. In this context, different objectives could be identified on AVAX:
- 18.89 dollars: a second HVN which is identifiable, it is a level on which the market reacted on several occasions.
- The 50% of Fibonacci which is in confluence with the MA 100. A few weeks ago, AVAX got rejected on the downside on the MA 100.
- Finally, we could consider a return to the VAH or even the EMA 200 in the event that a bullish momentum takes hold over several weeks.
AVAX is in a bad position against Bitcoin?
Against Bitcoinwe can see the underperformance in which AVAX has been involved for several weeks. On many occasions the asset has been made rejected on the trio of EMA 13/25/32, which demonstrates the strength of the downtrend. For AVAX to resume an upward trend, the challenge is clear: overcome the first three EMAs as well as the 50% Fibonacci to register a new high higher than the previous one. If AVAX succeeds, a favorable situation could develop with a greater probability for a rise in price against the dollar.
However, Warning that the asset does not extend its downtrend against bitcoin in parallel with a potential breakout of support against the dollar. If so, there could be room for a multi-dollar drop in the asset. Of course, nothing is done yet, especially since a resumption of the 50% of Fibonacci would allow AVAX to take the direction of the horizontal level which is in confluence with the MA100. The next few weeks will be to be watched to identify the continuation of the downtrend or an upward trend reversal.
Here we are at the end of this analysis of AVAX, you can see the difficulty for the asset to maintain itself against the king of cryptocurrencies. If it continues its fall against it, it would be illusory to imagine a bullish explosion of AVAX against the dollar since investors favor assets that are in a situation of outperformance. However, against the dollar, although the asset is on an increasingly fragile support, the risk/reward ratio is greater than if the asset were under resistance and a breakout was expected at the rise. Thus, it is up to you to judge according to your investment theses if it seems interesting to pay for the support. We must keep in mind that the trend is down and that, for the moment, there are no signs of improvement in the macroeconomy.
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