Avalanche (AVAX) Price Risks 20% Drop If it Loses $35 Support

Key Takeaways

• Avalanche (AVAX) has deviated above the $48 resistance.
• The price trades inside a descending triangle pattern.
• Will AVAX break out or break down from this bearish pattern?

Avalanche delivered five months of explosive growth between October 2023 and March 2024, climbing to the current cycle high of $65.39.

However, bullish momentum waned afterward, leading to a bearish trend. AVAX showed promise by ending a 73% decline, but that simply led to the creation of a lower high and another steep drop.

With AVAX risking losing the $35 support area, AVAX faces a critical crossroad. If this level fails to hold, a deeper correction could follow.

Let’s look at the charts and determine how likely this is.

AVAX Deviates Above Resistance

The weekly time frame AVAX chart shows that the price has increased alongside an ascending support trend line since September 2023.

While doing so, it increased above the $48 horizontal resistance area twice (black circles), but failed to sustain its upward movement. On top of the deviations, AVAX also created a lower high, another sign of a bearish trend.

The price has fallen by 36% since the second high and currently trades at $35, halfway between the ascending support trend line and the horizontal resistance area.

Because of the deviation, the most likely future outlook is a decline toward the diagonal support.

Technical indicators are also turning bearish. The Relative Strength Index (RSI) and Moving Average Convergence/Divergence (MACD) are both falling.

The RSI risks declining below 50, while the MACD has just made a bearish cross. Both these signals (black icons) usually happen once the trend turns from bullish to bearish.

So, weekly time frame readings for AVAX are bearish, predicting the downward movement will continue.

Despite this bearish outlook, there is some positive Avalanche news. The team announced that it will announce something big alongside SwissBorg at 18:00 CET on Jan. 21.

AVAX Price Breakdown?

While the weekly outlook is bearish, the daily one is uncertain. On one hand, the price has created a descending triangle, considered a bearish pattern.

The AVAX price is nearing the end of the pattern, so a decisive movement is likely soon.

While the triangle is a bearish pattern, there are bullish divergences in both the RSI and MACD (green), which make an eventual breakout more likely.

If AVAX breaks out from the resistance trend line, it can reach the $48 resistance area.

On the other hand, a breakdown below the triangle will likely lead to a 20% Avalanche drop to the ascending support trend line.

The short-term wave count is unclear. There is an upward A-B-C (black) and downward five-wave decline (white). This could mean that the correction is over and AVAX started a bullish trend reversal on Jan. 13.

However, AVAX has to hold its $32.80 lows (red) for the positive prediction to remain valid, eventually leading to a breakout.

So, whether Avalanche’s price breaks out or down from the triangle will likely determine the future trend’s direction.

A breakout could lead to a significant drop while a breakout would mean that Avalanche is likely to retest its previous highs.

Uncertain Trend Ahead

Avalanche has underperformed in 2024 and will likely do so again in 2025.

If the price breaks down from its descending triangle pattern, a 20% drop to the long-term ascending support trend line at $28 will be likely. The price could bounce once it gets there.