Avalanche (AVAX), a prominent cryptocurrency, has recently shown significant technical developments as it broke out of both long-term and short-term descending resistance trendlines. This article provides an overview of the recent price movements, technical analysis, and a prediction for AVAX’s potential future price action.
Breaking Long-Term Resistance
The daily timeframe technical analysis reveals that AVAX had been following a descending resistance trendline since April, with its price hitting a low of $8.61 in September. However, in October, the cryptocurrency initiated an upward surge and successfully breached the 165-day old trendline. This breakout has resulted in a 25% increase in AVAX’s price.
As of the most recent data, AVAX reached a high of $10.78, marking the first time it has touched the $10.80 horizontal resistance since August. This significant movement can be attributed, in part, to the launch of Stars Arena, a SocialFi platform on the Avalanche blockchain. Stars Arena’s launch generated increased interest and confidence in AVAX’s potential.
The daily Relative Strength Index (RSI) also supports the bullish trend, with readings above 50 and an upward trajectory signaling that buyers are still in control of the market.
Price Prediction: Potential Breakout Above $11
Analyzing the six-hour timeframe reinforces the positive sentiment observed on the daily chart. AVAX broke free from a descending resistance trendline on September 25, which initiated the current upward momentum. Additionally, AVAX surpassed the $9.80 horizontal resistance, and on October 7, it successfully retested this area as support, further solidifying the bullish case.
The six-hour RSI remains bullish as well, sitting above the 50 mark and continuing to rise, indicating the potential for further price gains.
If the upward momentum persists, AVAX could potentially see a 16% increase, reaching the $12.30 horizontal and Fibonacci resistance area. Fibonacci retracement levels suggest that after a significant price change in one direction, prices often retrace to a previous level before continuing in the same direction. The 0.5 Fib level is often seen as a key point in such corrective movements.
However, it’s important to note that despite this bullish scenario, there is a possibility of an 8% retracement to the $9.80 horizontal support area. The six-hour RSI is approaching overbought territory, and if it crosses into overbought territory, it could trigger such a retracement.
Avalanche (AVAX) has recently made significant strides in its price action, breaking free from both long-term and short-term descending resistance trendlines. The positive technical indicators, including the RSI, suggest that AVAX may have room for further price growth, potentially reaching the $12.30 resistance area.
However, traders should remain cautious as markets can be volatile, and corrections are always a possibility, especially if the RSI enters overbought territory. As always, it’s essential to conduct thorough research and stay updated with the latest developments in the cryptocurrency market before making any investment decisions.