Why Avalanche may be in for another price drop

Posted: September 5, 2023

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

• Avalanche has a bearish market structure across higher and lower time frames.
• The data showed that there was some support at USD 9.6 and an immediate price drop may not be imminent.

Avalanche [AVAX] slipped below the $10 support level a few hours before going to press. A report from last week highlighted the strong bearish bias on the 1-day chart, and this outlook has not changed since.

Read Avalanche [AVAX] Price Forecast 2023-24

The price action in a lower time frame showed that selling pressure was mounting. The psychological support of $10, which was also significant from a technical perspective last year, was broken.

An AVAX decline of more than 10% started to take shape

Source: AVAX/USDT on TradingView

It was not a good time to be an Avalanche bull. The market structure on the daily and 4-hour timeframes was bearish. The H4 chart showed a bullish order block at the $10 level, but as it was breached in the past few hours, it turned into a bearish breaker. The red box showed that a retest of the $9.77-$10.06 and rejection would provide an ideal short position.

A move above the USD 10.2 level would invalidate the bearish idea presented. In the south, the $8.59 was a target with a good chance of being hit. It represented the 23.6% Fibonacci extension level to the south, with levels plotted based on the rally from $10 to $15.97 in June and July.

The RSI was below the neutral 50 agreeing with the market structure on the momentum side. The OBV saw a spike on Aug. 29, but has recovered that gain, showing that the bulls couldn’t keep up the pressure.

Books showed large buy orders at $9.6. What can traders expect now?

Source: Mob chart

Data from MobChart showed limit buy orders worth nearly $1 million, from $9.6 to $9.48. This suggested that AVAX could see a rebound at or just above those prices and push liquidity north before another decline. One way or another, it may take some time for this wall of buyers to run out.

Source: Coinalysis

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On September 4, Open Interest rose slightly as the price dropped from $10 to $9.7. This indicated short selling and signaled bearish sentiment in the near term. The place CVD also fell off a cliff in recent hours.

Therefore, based on the evidence, it was safe to say that Avalanche prices are likely to fall further south over the next two weeks. Traders do not need to take FOMO positions, but can wait for movement in areas of interest, such as the $10 breaker block, to assess trading opportunities.