AVAX: Bulls make a last stand at critical support level

Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.

• The market structure of Avalanche over the past month showed strong bearishness.
• The volume indicators showed buying pressure might not be enough to stem the losses.

Avalanche [AVAX] has faced consistent losses on the price charts in recent weeks. The on-chain metrics showed that network activity was in decline. However, the planned token unlock is something that investors can watch out for.

Read Avalanche’s [AVAX] Price Prediction 2023-24

Since the market knows of this event, its impact on the price might not be notable or immediate. In the past, this event has been accompanied by a downtrend in prices. If this were to repeat, AVAX could lose the psychological $10 level.

Fibonacci retracement and extension levels highlighted areas of interest on the chart

Source: AVAX/USDT on TradingView

On the 2-hour chart, AVAX formed a series of lower highs and lower lows in the past week to denote a downtrend. The Fibonacci levels (yellow) showed that the price was near the local low at $9.99 once more. It could bounce as high as $11.93 before another drop, although the evidence for such a bounce was not present.

Hence the likely path was a retest of the $10.5 resistance before a move to $9.41, the 23.6% extension level. The $10.15 and $10 levels highlighted in orange were extremely important. They represented low of 2023 thus far, and a demand zone in June and July 2021. $10.5 was also critical, and AVAX bulls have not put up a strong fight at these levels.

The RSI on the H2 chart outlined strong bearish momentum. The OBV continued to slide lower and the CMF showed sizeable capital outflow from the Avalanche market with a reading of -0.19. Therefore, a move below $10 and a subsequent retest could offer a shorting opportunity.

Coinalyze data pointed toward some bidding for AVAX in the past 24 hours

Source: Coinalyze

While the price has been in decline, it saw a tiny bounce from $10.27 to $10.4 on 21 August. It was accompanied by a growth in the Open Interest that amounted to $2 million worth of contracts.

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It was unclear if this came from bears building short positions below the $10.5 level or from early bulls.

The spot CVD showed clear selling pressure in the past few days. Alongside the OBV it was on a downtrend. The evidence at hand showed further losses were likely for AVAX, but a bounce to $11 can’t be discounted.