Avalanche (AVAX) Drops 21% as Breakout Momentum Fades: Will Price Bounce?

Key Takeaways

• AVAX nears the final leg of a downward correction.
• A recent bounce could signal a new uptrend or a larger drop.
• $30 resistance is pivotal for confirming bullish momentum.

Avalanche Price Analysis

After reaching a peak of $65 on March 18, Avalanche (AVAX) experienced a sharp decline to $30 by April 13, followed by 55 days of sideways trading.

This consolidation phase concluded with a breakout above $30, leading to a price rise to $41 by May 22. Since then, the price has followed a downward trend, potentially nearing its final downward leg.

The $65 peak signified an uptrend, ending at $9 in October of the previous year. This movement formed a five-wave impulse within a larger bull cycle, which subsequently entered a corrective phase.

Based on wave structure analysis, AVAX likely completed its C wave in an ABC correction pattern at the low on Aug. 5. 

Read more: Avalanche Price Prediction 2024: AVAX Price Analysis

With the daily Relative Strength Index (RSI) reaching an oversold level of 25%, some indicators suggested that the low was in and a new uptrend had begun.

However, despite the recovery, there is also a chance this rise was corrective and will lead to more downside. 

AVAX fell by 21% since its recent peak of $30 and is now at ascending support, still at a higher low. This will serve as a pivot point between scenarios. 

AVAX Price Prediction

If AVAX initiates a new bull phase following a 74% correction, its first five-wave pattern may end.

Although the wave count presents some challenges, it could still be valid as a leading diagonal, where wave four overlaps with the territory of wave two.

After testing the $20 support level on Sept.6, AVAX saw a 50% increase, reaching a high of $30 on Sept. 27.

This may represent the final increase in the five-wave sequence, as the price made a downturn afterward. 

On the other hand, this high concluded an ABC pattern, in which case the current decline is just the start of a larger one, leading to lower values than on Aug. 5.

Since we expect a bounce from its momentum and high, we will evaluate each possibility. 

If the price forms a three-wave advancement to the upside, ending as a lower high, we can see AVAX falling to $15 on its following downturn.

But if it continues past $30, that could mean we will see more upside in the subsequent period as a bullish phase is confirmed.