Avalanche (AVAX) Technical Indicators Foreshadow Possible Rebound Despite Death Cross

Avalanche (AVAX) has recently faced a substantial decrease in its market value. As reported by CoinMarketCap, AVAX is currently trading at approximately $35.26, which represents a minor increase of 2.56% from the previous day. Despite this slight uptick, the digital currency has suffered a significant decline of 26.55% over the past week. This downward trend reflects broader market dynamics and investor sentiment, which various technical and economic factors have influenced.

During the rally, the AVAX  market capitalization and 24-hour trading volume surged by 2.97% and 14.89%, respectively, to $13,327,520,860 and $684,687,060. 

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

The cryptocurrency peaked at $65 on March 18, and since then, it has seen a marked decrease in its value. Notably, the majority of AVAX investors remain in a profitable position, with 57.68% having purchased the asset at a price lower than its current market value. This suggests that while the short-term outlook might seem bleak, the long-term perspective held by many investors remains positive.

Technical Analysis and Future Projections

Technical indicators present a mixed outlook for AVAX. A significant development on its trading chart is the appearance of a Death Cross pattern, where the 50-day Exponential Moving Average (EMA) has moved below the 200-day EMA on the 4-hour price chart. This pattern is often considered a bearish signal and could indicate potential further declines in AVAX's price.

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

However, the Relative Strength Index (RSI) trending upwards, with a rating of 48.91, suggests that the bearish momentum may be weakening. Moreover, the Chaikin Money Flow (CMF) trend as it tries to shift into the negative region with a rating of -0.07.

Concurrently, in derivative markets, AVAX has shown volatility influenced by futures trading activities. Notably, a recent surge in long liquidations significantly impacted its price, demonstrating the influence of speculative trading on market dynamics. If AVAX manages to rally, it might target the $45 mark, corresponding to the 0.382 Fibonacci retracement level. Surpassing this could set the stage for a move toward $50, contingent on sustained positive market and investor sentiment.

Market Influences and Sentiment

Based on recent transaction data, the sentiment in the AVAX market appears to be neutral, with a slight negative bias. This neutrality reflects a balance between buyers and sellers, with no significant shifts in large transaction volumes, indicating stability among major holders. However, the futures market has played a critical role in recent price movements, primarily driven by the actions in long liquidations rather than direct selling pressure from large investors.

Despite these challenges, a subset of market analysts remains cautiously optimistic about a potential rebound, especially if broader market conditions improve. However, the prevailing sentiment is cautious, given the recent technical developments and the decrease in smart contract activity on the Avalanche network, suggesting a slowdown in developmental initiatives.