Avalanche (AVAX) Price Tests Long-Term Support After 60% Pullback

Key Takeaways

• Avalanche (AVAX) follows an ascending support trend line.
• The price is trading inside a short-term descending wedge.
• Can the AVAX price break out, and how will it fare in 2025?

AVAX has not performed well in the current market cycle. The current cycle high of $65.39 is 56% below the all-time high price.

Moreover, AVAX has fallen by another 60% since and risks breaking down from a long-term diagonal support trend line.

If that happens, it would all but confirm that AVAX has started its bear market. Let’s look at the price movement and see how likely that is.

AVAX Returns to Support

The weekly time frame AVAX chart shows that the price has fallen since creating a lower high in December 2024. After a 60% drop that culminated with a low of $21.20, AVAX bounced (white icon), validating both the $22 horizontal support area and an ascending support trend line that exists for 500 days.

This support is critical since a breakdown from it could take the AVAX price to the next horizontal support at $10.

There was some positive AVAX news coinciding with the bounce.

The team announced its partnership with the Keystone wallet, and the number of gaming projects built on Avalanche is quickly increasing. The number of Avalanche transactions is also increasing and is above 4 million, as shown in the AVAX explorer.

Despite the price bounce, technical indicators show weakness. The weekly Relative Strength Index (RSI) just fell below 50 while the Moving Average Convergence/Divergence (MACD) made a bearish cross (black circles).

As a result, the weekly chart gives a bearish AVAX prediction, suggesting that an eventual breakdown is the most likely future outlook.

AVAX Price Bounce?

While the weekly chart predicts a bearish outcome, the daily one suggests a bounce may occur. This is because the AVAX price has traded inside a descending wedge since its December high. The descending wedge is considered a bullish pattern, meaning that an eventual breakout from it is the most likely outlook.

However, the wave count shows a five-wave decline, meaning that the decrease could be a leading diagonal. As a result, the ensuing bounce could be a relief rally leading to a lower high before an eventual breakdown.

If this is the case, the AVAX price could reach the 0.5-0.618 Fibonacci retracement resistance area at $38.60 – $42.65 before falling again.

Furthermore, the RSI and MACD are both bearish. The indicators are trending downward and have not generated bullish divergences that could lead to a potential breakout.

As a result, the AVAX price could continue consolidating inside the wedge before an eventual breakout.

Difficult Year Ahead

AVAX faces a daunting 2025. With its bearish long-term readings and wave count that predicts a downward trend, the price could face more bearish pressure this year.

The only silver lining is the bullish wedge pattern, which could lead to an initial breakout before the price falls to new lows.