Avalanche (AVAX) has recently shown signs of a potential price reversal, sparking interest among investors. After defending the crucial $24 support level, AVAX surged nearly 7% from its previous day's low, trading close to $25.70 at the time of writing. This intraday recovery has provided some relief amidst broader market sell-offs. However, for AVAX to confirm a bullish reversal, it must sustain above key Exponential Moving Averages (EMAs). With transaction volumes decreasing by 40%, indicating reduced selling pressure, and technical indicators showing improved sentiment, could AVAX be on the brink of a sustained recovery? Let's delve deeper into the metrics and technical analysis to understand the potential trajectory of Avalanche's price.
Avalanche Price Action: Volume & Volatility Analysis
Avalanche price reversed near the $24 level and surged nearly 7% from the previous day’s low. At the time of writing, the AVAX price was trading close to $25.70, marking a 2.35% rise in intraday trading.
Avalanche price gained traction after the bulls defended the price above the recent support of $24 and resumed its recovery on the second day. At the time of writing, AVAX made a breakout above the previous day’s high and was up over 2.5%.
After the weakness in the broader market triggered a sharp selling in AVAX, price action pivoted to bearish. However, the intraday recovery has added some relief for investors.
However, AVAX price recovery needs to last a bit longer in order to claim a bullish territory as the price currently hovers below the key EMAs.
There has been a significant development in the transaction volume, which indicates the continuation of a recovery. Let’s analyze combining all the metrics and try to draw a clear picture of where Avalanche price could proceed next.
Volume & Volatility Analysis
The bears attempted a breakdown below the recent support of $24 yesterday; however, the bulls made a comeback in the later session, and the price closed higher, thus defending the support.
Moreover, the intraday movement reveals the domination of buyers headed for a recovery.
Additionally, along with the price recovery, there has been a significant development in the transaction volume. The intraday transaction volume has dropped by nearly 40% and was at $322 million a day. The drop in transaction volume reveals the waning interest of the sellers.
Moreover, the volume-to-market cap ratio was 3.25%, indicating low volatility in the crypto. It has a live market capitalization of $10.19 billion and ranks 12th in the cryptoverse.
AVAX Price: Technical Analysis
From a technical standpoint, the Avalanche price hovers below the key Exponential Moving Averages (EMAs) of 20, 50, and 200 days, indicating a strong bearish trend prevailing. Though the bulls have initiated a recovery, it needs to surpass the 200-day EMA in order to turn a bullish reversal.
On the higher side, the $33.5 level may act as a hurdle, which if surpassed, may validate a bullish reversal. On the lower side, the $24 level has been acting as the critical demand zone, which if breached, may trigger panic selling in the crypto.
At the time of writing, the RSI line and 14-day SMA line have made a bullish crossover, adding confirmation to a continued recovery. Both lines have recovered from an oversold region, indicating an improved sentiment.
Key Technical Indicators
- Relative Strength Index (RSI): The RSI has moved out of the oversold territory, suggesting that the selling pressure has decreased and buyers are gaining control.
- Moving Average Convergence Divergence (MACD): The MACD line is approaching a crossover with the signal line, which could indicate a bullish trend if the crossover occurs.
- Bollinger Bands: The price is moving towards the upper band, which could suggest increased volatility and a potential breakout.
Can AVAX Continue To Recover Or Fail?
Avalanche price surged 2.5% intraday today after defending the $24 support level, indicating a recovery. Despite broader market sell-offs, AVAX price recovery has reassured investors. However, for a bullish reversal, the price must sustain above the key EMAs.
Currently, AVAX hovers below the 20, 50, and 200-day EMAs, signaling a bearish trend. Transaction volume has decreased by 40%, indicating decreased selling pressure.
Now, if AVAX manages to surpass the $33.5 resistance, a bullish reversal could be confirmed. However, falling below $24 could lead to further sell-offs. The RSI and SMA lines suggest improving sentiment.
Potential Scenarios
- Bullish Scenario: If AVAX can sustain its momentum and break above the $33.5 resistance level, it could confirm a bullish reversal. This would likely attract more buyers and push the price towards higher resistance levels at $40 and $45.
- Bearish Scenario: If AVAX fails to maintain its support at $24, it could trigger panic selling, leading to a decline towards the next support levels at $20 and $18.
Conclusion
Avalanche (AVAX) is showing promising signs of recovery after defending the crucial $24 support level. The decrease in transaction volume and the bullish crossover in technical indicators suggest that the selling pressure is waning and buyer interest is increasing. However, for a confirmed bullish reversal, AVAX needs to break above the key resistance level at $33.5 and sustain its position above the key EMAs.
Investors should keep a close eye on the price action and key technical indicators to make informed decisions. While the current sentiment is improving, the broader market conditions and potential external factors could still influence AVAX's price trajectory.
Disclaimer
The views and opinions stated by the author, or any people named in this article, are for informational purposes only and do not establish financial, investment, or other advice. Investing in or trading crypto or stock comes with a risk of financial loss.
