Avalanche (AVAX) Price Faces Resistance, Will The Recovery Rally Continue?

In the last 24 hours, the Avalanche (AVAX) cryptocurrency has exhibited a notable consolidation pattern on the trading charts, indicating a phase of uncertainty among traders. Starting from the left of the chart, the price initiated a steep decline, reaching a local low at approximately $38.15, suggesting an immediate level of support. From this point, the price recovered and entered a consolidation phase with minor fluctuations, maintaining a price above $38.15 for a while.

Following the consolidation, the price surged, creating a peak of around $39.75, which we can consider as a short-term resistance level. After reaching this peak, the price showed a series of lower highs and lower lows, indicating a downtrend. 

The price failed to break the resistance at $39.75 again and began to descend steadily, forming what appears to be a descending triangle pattern, which typically suggests the continuation of a downtrend. At press time, the AVAX price had succumbed to bearish pressure, with a price of $38.42, a 1.42% decline in the last 24 hours. 

AVAX/USD 24-hour price chart (source: CoinMarketCap)

The price ultimately broke down from this pattern, as evidenced by the sharp decline towards the end of the chart, suggesting bearish momentum. In terms of trading volume, it has increased by 9.65%, which could imply greater sell-side pressure accompanying the price decline. The market cap decreased slightly by 0.69%, aligning with the small decrease in price.

AVAXUSD Technical Analysis

On the AVAXUSD 4-hour price chart, there has been a clear downtrend, marked by a sequence of red candles showing descending highs and lows. In the most recent period, the trend shows a slight recovery as the last few candles are green, indicating an upward price movement in the very short term. This uptrend is quite modest compared to the prior downtrend, and the price is testing the Fibonacci retracement levels. 

The Fibonacci retracement levels plotted from a recent high to a low give us potential support and resistance levels. It appears the price found some resistance near the 0.236 level at around $47.35 and failed to sustain above it. On the lower side, the 0.786 level at approximately $38.85 could be considered a support area, which aligns with the price action that bounces slightly above this zone.

The price chart's Relative Strength Index (RSI) rating of 56.55 suggests that despite the dip, bullish momentum may still be on the way. However, having shifted below its signal line, the bearish pressure is increasing. For a reversal, the RSI would need to invalidate the current trend and shift above its signal line. 

AVAX/USD 4-hour price chart (source: TradingView)

Moreover, the MACD line (blue) is below the signal line (orange), which typically indicates bearish momentum. However, the histogram, which measures the distance between the MACD line and the signal line, is showing that the bulls still have an upper hand.

The SuperTrend indicator provides a visual representation of the prevailing trend, using a trailing stop and reverse method to determine the direction. In the earlier part of the chart, the price is under the SuperTrend line, indicating a bearish trend. As we progress, the price breaks above the SuperTrend line, suggesting a potential change to a bullish trend. However, the most recent candles have dipped back below the line, indicating that the bullish trend might not be sustained.

Over the last 24 hours, the price action has been somewhat bullish as the price moved up within the blue-shaded region, which seems to act as a short-term ascending channel. Despite this recent uptrend, the price has not broken above the channel, suggesting that the bearish trend could still be in play.

AVAX/USD 4-hour price chart (source: TradingView)

In addition, the Relative Vigor Index, which is an oscillator that compares the closing price to the open price within a period, has its signal line (red) above the RVI line (green). Typically, when the signal line crosses above the RVI line, it can be seen as a bearish signal. However, both lines are relatively close, indicating that the momentum is not strongly in one direction. 

Moreover, the Average Daily Range shows the average price range over a set number of days and can help identify volatility. A peak in the ADR can often correspond to increased market volatility, as seen in the large spike on the chart several days prior. However,  considering the ADR, volatility has decreased from the spike seen previously, hence indicating a shift towards bearish pressure.