Avalanche (AVAX) is showing promising signs of a potential rally after enduring a series of corrections in recent months. Currently priced at $23.43, AVAX has successfully broken through a crucial resistance level at $22.80, indicating a significant shift in the daily timeframe.
This development signifies a notable change in momentum for AVAX, which has been in a downtrend since reaching its all-time high in March. Following a sustained period of decline, AVAX is demonstrating strength, drawing the attention of analysts and investors who are optimistic about a bullish surge in the upcoming months as the token rebounds from its prolonged downturn.
Positive Shift in AVAX Correction Trend
Following a substantial correction starting from March, Avalanche has experienced a significant decline of over 70% from its peak. However, analysts now believe that this downward trend might have concluded, paving the way for a potential rally.
A crypto analyst and trader known as Dom from X has pointed out AVAX’s price action forming a clearly defined 6-month descending channel, a pattern often associated with a bullish reversal. Dom suggests that a confirmed reversal would only occur when the bearish structure is broken in higher timeframes.
Dom is closely monitoring the $25 psychological threshold as a critical confirmation point. A sustained breach above this level would signal a stronger shift towards a bullish sentiment and potentially trigger substantial upward momentum for AVAX.
With indications of recovery in the L1 blockchain, analysts are increasingly positive about the future outlook of AVAX in the forthcoming months. Observing the token’s current positioning relative to a key indicator, the market is eager for further validation of a bullish trend.
Prior to a potential rally, a significant liquidity level must be tested by the price. The outcome of this test will be influential in determining whether the recent upward movement can be maintained or if additional consolidation is necessary.
Price Testing Key Levels for Consolidation
At present, Avalanche is trading at $23.43 and is undergoing testing against the 4-hour (4H) 200 exponential moving average (EMA), a crucial technical indicator that has not been challenged since July 29. This level holds significance as it commonly acts as a dynamic resistance in the market. If AVAX can consolidate above this 4H 200 EMA, bulls may set their sights on the next target at $25.88, a pivotal level that could further affirm the uptrend.
However, if the price fails to close above the 4H 200 EMA, it is likely to revisit the previous high at $22.80 as the subsequent logical level for testing. The upcoming days will be critical in determining AVAX’s price movements as market participants monitor closely for either a sustained rally or a potential retracement. Given the right momentum, there is considerable potential for future gains.
Image credits: Dall-E, TradingView.
