- Long positions targeting $37 could experience large-scale liquidations.
- If cash flow stagnates, AVAX could fall to $32.
AMBCrypto’s analysis of liquidation levels has raised a warning sign for Avalanche [AVAX] traders. According to the data evaluated with the help of Hyblock Capital, there was a cluster of liquidity around the $37 region.
For context, liquidation levels show the estimated prices at which a liquidation event could occur. The chart below shows that AVAX could head towards $37.
Is south the next direction?
But once it reaches the zone, it can trigger a stop-loss of highly leveraged long positions. When this level is reached, very little liquidity may remain, forcing the price to turn south.
Source: HyblockCapital
AMBCrypto also observed the Cumulative Liquidation Level Delta (CLLD), which appeared to show a similar signal. The CLLD can be used to establish a directional bias for a cryptocurrency.
At the time of writing, the CLLD was positive. But this position suggests that AVAX could undergo a full retracement, which could send its price lower.
AVAX’s price at the time of writing was $34.54, indicating a decline of 5.62% over 24 hours. Trading volume of the ninth most valuable cryptocurrency also fell.
A situation like this means that the price action has become weak. Should volume increase while price falls, AVAX could fall to $32.
But it’s important to assess the opportunity from a technical perspective, and we did that.
AVAX sees $32
According to the daily chart, AVAX was about to fall below the short- and medium-term EMAs. EMA is an abbreviation for Exponential Moving Average. At the time of writing, the 20 EMA (blue) and 20 EMA (yellow) were almost in the same spot.
This suggests that AVAX does not yet have a clear direction. Should the price fall below the EMAs, AVAX’s next move could be a drop to $33.10 or $32.06.
Either way, a price drop seems more likely for the token.
But if the 20 EMA rises past the 50 EMA, the bearish thesis could be invalidated. As for the Money Flow Index (MFI), the graph showed that its value had increased.
This rise suggests that bulls were trying to establish positive capital flow to influence an uptrend for AVAX. If this continues, AVAX could target $37.
However, it could face rejection at that level given the liquidity cluster at the time.
Source: TradingView
The Relative Strength Index (RSI) also rose to 49.87, indicating a slight increase in buying momentum. If the RSI moves to 50.00, AVAX could recover to $35. If not, the token may continue to trade between $32 and $35.
Read Avalanche [AVAX] Price forecast 2024-2025
In terms of the financing rate, data about the chain showed that the benchmark was positive. If the funding rate holds, it means that the perp price is trading at a discount compared to the index value.
Source: Santiment
However, the positive financing rate suggested that the perp price was higher than the spot price. Moreover, the positive financing rate while the price decline of AVAX leads to a bearish signal.