AVAX: Bulls are making a final stand at critical support level

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

• Avalanche’s market structure has exhibited strong bearishness over the past month.
• Volume indicators showed that buying pressure may not be enough to contain losses.

Avalanche [AVAX] has been taking consistent losses on the price charts for the past few weeks. The on-chain stats showed that network activity decreased. However, the planned token unlock is something investors can pay attention to.

Read Avalanches [AVAX] Price Forecast 2023-24

Since the market is aware of this event, its impact on price may not be noticeable or immediate. In the past, this event was accompanied by a downward trend in terms of prices. If this were to repeat, AVAX could lose the $10 psychological level.

Fibonacci retracement and extension levels marked 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 over the past week to signal a downtrend. The Fibonacci levels (yellow) showed that the price was once again near the local low at $9.99. It could bounce to $11.93 for another drop, though evidence of such a bounce was not there.

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

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

Coinalyze data indicated a bid for AVAX in the past 24 hours

Source: Coin analysis

Although the price fell, it saw a small increase from $10.27 to $10.4 on August 21. It was accompanied by a growth in Open Interest that reached $2 million in contracts.

Is your wallet green? Check out the Avalanche Profit Calculator

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

Spot CVD has shown clear selling pressure over the past few days. Next to the OBV, it was in a downward trend. The available evidence showed that AVAX was likely to suffer further losses, but an increase to $11 cannot be ruled out.