The Avalanche (AVAX) price has increased significantly over the past 20 days, culminating with a high above $40 on February 10.
Avalanche bounced at a long-term horizontal support area but trades inside a shorter-term resistance level.
Avalanche Clears Long-Term Resistance
The weekly time frame technical analysis shows the AVAX price has increased since bouncing on January 22. The upward movement validated a critical horizontal area as support. Previously, the area had provided resistance since May 2022.
AVAX created a bullish weekly candlestick (green icon), catalyzing the current increase. The price did not break above the 2023 high despite the upward movement.
The weekly Relative Strength Index (RSI) gives a mixed reading. Market traders use the RSI as a momentum indicator to identify overbought or oversold conditions and to decide whether to accumulate or sell an asset.
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Readings above 50 and an upward trend indicate that bulls still have an advantage, whereas readings below 50 suggest the opposite. While the indicator is above 50, it has been falling for the past two months. Additionally, it crossed below overbought territory and has not moved back up since.
AVAX Price Prediction: Relief Rally or Bullish Trend Reversal?
The daily time frame chart does not confirm the future trend’s direction for AVAX because of the mixed price action. The daily chart shows that the upward movement since January 22 has been contained inside an ascending parallel channel. Such channels usually contain corrective movements.
On February 10, the channel’s resistance trend line rejected the AVAX price (red icon). Additionally, the rejection coincided with the $40 resistance area.
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Despite the rejection, the daily RSI gives a bullish reading. The upward movement took the indicator above 50 and into bullish territory. The RSI is also trending upwards.
Cryptocurrency trader InmortalCrypto suggests the AVAX price will follow SOL if the latter pumps.
“If $SOL pumps, $AVAX will follow. Muscle memory,” InmortalCrypto tweeted.
Due to these mixed readings, the reaction to the $40 area will be key in determining the future trend’s direction. A successful breakout can trigger a 23% AVAX increase to the 2023 high at $50.
Conversely, a rejection from the $40 area and breakdown from the channel can catalyze a 16% AVAX drop to the closest support at $33.
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