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Avalanche (AVAX) Struggles Below Key Averages — $50 Bounce Uncertain

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Victor Olanrewaju
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Key Takeaways

  • AVAX price continues to trade below the 20 and 50 EMAs despite its slight rebound.
  • The sentiment around the token remains pessimistic, negatively affecting demand.
  • The 4-hour analysis shows that the AVAX price may fail to break the overhead resistance.

In March 2024, the price of Avalanche (AVAX) hit a yearly high of $65. But eight months later, the altcoin experienced a long period of correction and consolidation, dropping below $20 at one point.

But in November, with support near 23, AVAX broke above the falling channel. This development drove the price above $55 on Dec. 4. It, however, declined to $35 recently.

Today, the cryptocurrency has hinted at potential recovery. However, several technical indicators suggest that the ongoing upswing could be fakeout.

AVAX Rises, but Can’t Find a Clear Path

The Exponential Moving Average (EMA) is a key indicator that reveals that AVAX might struggle to sustain the uptrend. Like the Simple Moving Average (SMA), the EMA uses price changes to measure the trend direction.

When the EMA is below the price, the trend is bullish, while it is bearish when it is above the price.

According to the AVAX/USD daily chart, the 20 EMA (blue) close and the 50 EMA (yellow) are positioned above the AVAX price. This indicates that AVAX might still succumb to the bearish trend.

Furthermore, the shorter the EMA crossed below, the longer the one, signifying a death cross. This death cross validates the thesis that cryptocurrency is still subject to a possible downtrend and that bullish momentum has yet to be validated.

AVAX price analysis — possible breakdown
AVAX/USD Daily Chart | Credit: TradingView 

Sentiment Stays Negative

Amid this price movement, the Weighted Sentiment around AVAX has remained negative since last week. Weighted Sentiment employs social volume to measure market participants’ positive/negative remarks about a cryptocurrency.

When the sentiment reading is positive, it typically indicates a high volume of favorable comments and an optimistic outlook from market participants.

However, the current negative sentiment surrounding the Avalanche token reveals that the broader market views the altcoin with pessimism.

If this trend continues, AVAX could experience declining demand, which may lead to downward pressure on its price.

AVAX sentiment turns bearish
AVAX Weighted Sentiment | Credit: Santiment 

AVAX Price Prediction: Retracement Looms

On the 4-hour chart, the Avalanche token appears to follow a similar trend that drove it above $50 in December. However, the token is close to hitting the supply zone near the 0.236 Fibonacci retracement point at $37.65.

The last time AVAX closed in on the region was on Jan. 12. As soon as it did at the time, it faced rejection, leading the price to fall to $32.62 later on.

At the time of writing, the on-Balance Volume (OBV) remains in negative territory. This indicates that selling pressure drives the majority of the volume surrounding AVA.

This bearish reading further reinforces the negative sentiment surrounding the token. Unless there is a shift toward buying pressure, AVAX may continue to face difficulty sustaining its upward momentum.

AVAX price analysis shows potential retracement
AVAX/USD 4-Hour Chart | Credit: TradingView 

In this instance, the price might drop to $32.62 again. The value could slide below the $30 mark in a highly bearish scenario.

On the flip side, if AVAX rises above the overhead supply zone, the rally might continue and be near $50 in the process.

Disclaimer: The information provided in this article is for informational purposes only. It is not intended to be, nor should it be construed as, financial advice. We do not make any warranties regarding the completeness, reliability, or accuracy of this information. All investments involve risk, and past performance does not guarantee future results. We recommend consulting a financial advisor before making any investment decisions.
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Victor Olanrewaju

Victor is a reporter at CCN. Currently residing in Lagos, Nigeria, Victor focuses on writing news and providing readers with on-chain and technical analysis. Before he joined CCN, he worked as an analyst at BeInCrypto and AMBCrypto. He published several pieces at these outlets detailing investor behavior and analyzing price action across different cryptocurrencies. Victor holds a Bachelor's degree in Physics from the University of Ibadan. With his background, he finds it seamless to break down technical terms into simpler words while keeping readers engaged.
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