Avalanche (AVAX) Drops After All-Time High, Consolidates Above $80

Avalanche (AVAX) is at risk of falling below a crucial support level that has been in place since Nov 2021. This would indicate that the trend is bearish. AVAX has been decreasing alongside a descending resistance line since reaching an all-time high price of $147 on Nov 21. So far, the triangle has rejected the token thrice, most recently on Jan 2 (red icon). Despite the rejection and subsequent decrease, AVAX has created a strong support level at the $80 horizontal support area, which previously acted as the all-time high resistance. When combined with the descending resistance line, this would create a descending triangle, which is considered a bearish pattern. However, it is also possible that AVAX is following an ascending support line (dashed), which would create a symmetrical triangle. This is considered a neutral pattern, so both a breakout and breakdown would be possible.

Future movement

The possibility of a downward movement is also supported by technical indicator readings, especially the MACD. The MACD is created by a short- and a long-term moving average (MA). Currently, both the signal line and the histogram are negative. This means that the short-term MA is slower than the long-term one. It is a sign often associated with bearish trends. The previous time it occurred was on Aug 2021 (green circle), when the AVAX price was close to $20. Furthermore, the RSI, which is a momentum indicator, is below 50. This is also a sign of bearish trends. If a breakdown transpires, the closest support area would be at $62. This is the 0.618 Fib retracement support level.

AVAX wave count

Cryptocurrency trader @CryptoTony_ tweeted an AVAX chart, stating that if the Jan 7 low holds, it is possible that the token will continue increasing towards a new all-time high.

If the correction ended with the Jan 7 lows (red line), the ensuing increase would be expected to be a five wave upward movement. However, the increase has been a three wave structure (highlighted). Therefore, it is more likely that the AVAX trend is still bearish, and the token will eventually break down.

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