Disclaimer: The information presented does not constitute financial, investment, trading or other types of advice and is solely the opinion of the author
- AVAX moved up on the daily chart with a possible MACD crossover
- The upside breakout from the bullish wedge has a target between $15.5 and $16.0
- However, the price-volume difference can lead to a price reversal
Since the crypto crash in early November, Avalanche (AVAX) have posted failed price recoveries. The rallies only pushed AVAX lower and lower, breaking through several supports along the way.
Read Avalanche’s [AVAX] Price prediction 2023-24
At press time, however, AVAX seemed determined to regain lost ground. It traded at $13.05 after an upside breakout from a bullish wedge pattern (blue line). An earlier and similar bullish wedge pattern (blue, dotted ) led to a bullish breakout, one that drove AVAX to a new ATH of $20.61 in November.
If history repeats itself, AVAX could reach this new high in the next few weeks or months.
Can bulls maintain their momentum?
AVAX’s price action curved out a falling wedge (blue, dotted) between September and mid-October. After that, a bullish breakout, typical of a falling wedge pattern, set AVAX on an uptrend from mid-October onwards.
The rise after mid-October drew a rising channel (white). In most cases, an ascending channel is followed by a descending trend. In AVAX’s case, the downtrend coincided with the crypto crash in early November. The altcoin’s price crashed from $20 to $11.5, losing roughly 50% of its gains in the process.
The price movement of AVAX after the crash formed another bullish wedge chart (blue line). If it follows the previous trend, the bullish breakout could set AVAX up for 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 a November ATH of $20.6 (100% Fib level). The prevailing bullish wedge can also trigger an uptrend. Because of the high, the new target could be $15.64.
The Relative Strength Index (RSI) appeared to be pulling back from the oversold territory – a sign of selling pressure. A possible Moving Averages Convergence Divergence (MACD) crossover also revealed that buyers have moved closer to control.
However, On Balance Volume (OBV) forecast a slight rebound after making a series of lows since late September. It underlined low trading volume which could undermine the buying pressure.
An intraday candlestick closing below press time support at $11.46 would invalidate the above bullish bias. In this case, AVAX can extend the rejection of new support offers to $9.3 or $8.5.
Price-volume discrepancy and decline in development activity
In accordance Sentiment, AVAX’s development activity increased steadily from mid-October. The price also rose significantly, as shown in the chart above and the rising channel (white) on the price chart.
However, development activity decreased from the end of October, then rose in mid-November and fell afterwards. The price followed the trend with all consistency. In addition, price increases corresponded to positively weighted sentiment and vice versa.
At press time, a price-volume divergence revealed falling trading volume with rising prices. This is likely a sign of an imminent price correction.
Therefore, it may pay for long-term investors to track AVAX’s development activity and sentiment.