Disclaimer: The information presented does not constitute financial, investment, trading or other advice and is solely the opinion of the author.
- Avalanche indicators point to further gains for the token
- The liquidation levels and range formation meant that late bulls could be caught offside for the foreseeable future
Avalanche [AVAX] saw a strong bullish run over the past six days. The token recorded a gain of almost 25% as it rose from $8.65 to $10.8. During this time, Bitcoin [BTC] also rose by almost 24%.
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A technical analysis report from AMBCrypto last week highlighted that the $9.2 level saw a significant portion of liquidations, based on Hyblock data. The $8.8-$9 zone was also highlighted as a region where a bullish reversal towards $10 could begin. This analysis has now been confirmed.
Should AVAX traders wait for a bullish breakout past the two-month high?
Source: AVAX/USDT on TradingView
On August 29, AVAX saw a short-term rise to the $11.21 level before a downtrend occurred in September. The price action of the second half of August reflected the importance of the $11-$11.2 region for the bears.
This level has been tested three times in the past two months, including at the end of August. The bears have won each time, although the one in early October was an explosive move to $11.88, which quickly fell back.
The market structure on the four-hour chart was bullish and so was the Relative Strength Index (RSI). On-Balance Volume (OBV) reached a higher level last week to reflect buying volume. However, a breakout and retest of the $11.2 resistance zone would be necessary for the next leg to move higher.
Therefore, traders might consider shorting AVAX near the $10.8 region, with an invalidation just above $11.2.
Has bullish sentiment changed in the last 36 hours?
Source: Coinalyse
On October 24, AVAX reached $10.8 and then witnessed a small decline to $10.18. This was also accompanied by a decline on the Open Interest (OI) chart. The falling prices and OI indicated bearish sentiment in the market in the short term, a feature that continued at the time of writing.
Source: Hyblok
Hyblock data showed that $3.2 million in short liquidations could be triggered on a move to the $10.67 level. Another $1.5 million would be found at the $10.76 level. These findings help justify the idea of shorting a token on a solid uptrend.
Realistic or not, here is AVAX’s market cap in BTC terms
These short liquidations could cause some near-term volatility and a possible longer move towards $11 before a bearish reversal. If such a scenario were to occur, short sellers could make a profit.