Disclaimer: The information presented does not constitute financial, investment, trading or any other advice and is solely the opinion of the author
AVAX rose on the daily chart with a possible MACD crossover
The bullish wedge upside breakout has a target between $15.5 and $16.0
However, the divergence between price and volume can cause a price reversal
Since the crypto crash in early November, Avalanche (AVAX) has had unsuccessful prize recoveries. The rallies just pushed AVAX lower and lower, breaking through several supports along the way.
Read Avalanches [AVAX] Price Forecast 2023-24
At the time of writing, however, AVAX seemed determined to regain lost ground. It was trading at $13.05 after an upside breakout of a bullish wedge chart pattern (blue line). An earlier and similar bullish wedge pattern (blue, dotted) led to a bullish breakout, one that propelled AVAX to a new ATH of $20.61 in November.
If history repeats itself, AVAX could reach this new high in the coming weeks or months.
Can Bulls Sustain Their Momentum?
AVAX price action formed a descending wedge (blue, dotted) between September and mid-October. Then a bullish breakout, typical of a bearish wedge pattern, put AVAX in an uptrend from mid-October.
The uptrend after mid-October drew a rising channel (white). In most cases, a rising channel is followed by a falling trend. In the case of AVAX, the downtrend coincided with the early November crypto crash. The price of the altcoin crashed from $20 to $11.5, losing about 50% of its gains in the process.
AVAX’s price movement after the crash formed another bullish wedge chart pattern (blue line). If it follows its previous trend, the AVAX bullish breakout could spark another price rally in the coming days or weeks.
The height of the previous bullish wedge matched the height of the ascending channel (white), leading to an ATH in November at $20.6 (100% Fib level). The prevailing bullish wedge could also spark an uptrend. Due to the height, the new target could be $15.64.
The Relative Strength Index (RSI) appeared to be pulling out of oversold territory – a sign of selling pressure. A possible Moving Averages Convergence Divergence (MACD) crossover also revealed that buyers are getting closer to control.
However, the On Balance Volume (OBV) predicted a slight increase after a series of lows since late September. It underscored low trading volume that could undermine buying pressure.
An intraday candlestick close to press time support at $11.46 would invalidate the above bullish bias. In this case, AVAX could extend its decline to new supports at $9.3 or $8.5.
Price-volume divergence and decline in development activity
According to Sanitation, AVAX’s development activity increased steadily from mid-October. The price also increased significantly, as shown in the chart above and the ascending channel (white) on the price chart.
However, development activity fell from the end of October, then picked up again in mid-November and then fell. The price followed the trend with all consistency. Moreover, price increases corresponded to positively weighted sentiment and vice versa.
At the time of writing, a price-volume divergence revealed falling trading volumes with rising prices. This is likely a sign of an impending price correction.
Therefore, it may be worthwhile for long-term investors to follow AVAX’s development activity and sentiment.
This post Going long on AVAX? Consider this ‘catch’ before you jump in
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