AVAX Price Drops 10% After Avalanche9000 Testnet Launches Successfully
Why is the Avalanche Price Falling? | Credit: Hameem Sarwar
Key Takeaways
- Avalanche (AVAX) reached a 230-day high on Nov. 25.
- The Avalanche9000 Testnet went live on Nov. 25.
- When will Avalanche’s short-term correction end?
The Avalanche price started a swift upward movement at the beginning of November. After an over 100% price increase, AVAX reached a high of $47.93 on Nov. 25, the highest price since April. The same day, Avalanche9000, one of the biggest upgrades in the network’s history launched.
Even so, the AVAX price fell sharply the same day, creating a bearish daily candlestick. Let’s examine the AVAX price movement and determine the areas that can provide support and reverse this decline.
AVAX Reaches Range High
The weekly time frame AVAX chart shows that the price has increased alongside a long-term ascending support trend line since October 2023. More recently, it bounced twice in August and November 2024 (white icons) at the trend line.
The upward movement caused a breakout from the $31 horizontal resistance area, from which AVAX broke down in June. Since the most recent bounce, AVAX created three successive bullish weekly candlesticks.
On Nov. 25, the Avalanche price reached a high of $47.93. However, it was rejected by the $48 horizontal resistance area and is creating a bearish weekly candlestick (black icon). If so, it could lead to a retest of the $31 horizontal area, confirming it as support.
Technical indicators are bullish. The Relative Strength Index (RSI) broke out its bearish divergence trend line (green) and is above 50. The Moving Average Convergence/Divergence (MACD) made a bullish cross and is increasing, recently crossing above 0.
So, despite the ongoing correction, the weekly time frame suggests the AVAX price will eventually break out from the $48 resistance area and move to a new yearly high.
Avalanche9000 Testnet
Last week, Avalanche teased the biggest upgrade in its network history. On Nov. 25, the team announced that the Avalanche9000 Testnet is live. The upgrade will reduce Layer-1 deployment costs by 99.99%, making them more economically feasible. Additionally, developers can apply for a retroactive grant program with up to $40 million in rewards.
The primary chain is the first component, powering the network and allowing liquidity to flow to other Layer-1s. The network of these L1s is the second component, while the third one is Interchain Messaging, which improves interoperability and allows the L1s to communicate with each other.
Avalanche9000 will also support subnets, allowing developers to configure their functionalities on the Testnet before deploying them.
AVAX Price Cools Off
The daily time frame AVAX chart shows a five-wave upward movement with a leading diagonal in wave one and an extended wave three.
If the count is accurate, wave three has ended, and the AVAX price is now correcting in what is likely wave four.
In this case, AVAX will fall toward the 0.382-0.5 Fibonacci retracement support levels at $35.14-$38.17 before resuming its upward movement.
The bearish candlestick (black icon) and bearish divergence (green) in the RSI support this possibility since they are often at the top of wave three.
The first preliminary target for the wave five top is at $53.22, created by the 2.61 extension of wave one. However, a more accurate one can be determined once wave four is over.
Correction Before Breakout
While the long-term chart is bullish, the short-term one suggests AVAX has reached its local top.
As a result, the Avalanche price could gradually decline toward its closest support at $35-$38 before reigning its footing and breaking out from its long-term resistance.
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