Technical analysis indicated multiple factors making the $20 area a significant resistance zone for AVAX bulls.
While a minor price bounce was possible, a bearish move seemed imminent.
In early March, Avalanche (AVAX) was predicted to experience a 10% price bounce, yet a continuation of the downtrend was expected, which materialized.
Subsequently, an analysis forecasted a price drop to $14, and just a week later, AVAX fell to $15.2.
The bearish sentiment persisted, as demand was insufficient to elevate Avalanche from its downtrend, compounded by strong overhead resistance zones.
Swing traders might consider entering short positions or staying out of the market in the coming days.
Avalanche poised to sustain bearish trend
The rally observed in November was completely undone by February 24. Since that date, Avalanche has dropped another 14% in value.
Trading volume remained relatively high during the descent, indicating substantial selling pressure.
Both the 20 and 50-period moving averages illustrated consistent downward momentum. The 20 DMA acted as dynamic resistance over the last two weeks, sitting at $20.29.
The $20-$21.7 area represented a resistance zone, identified as a bearish order block, likely deterring any AVAX price rebounds.
Additionally, the Fixed Range Volume Profile tool indicated that the $20.5-$22.1 range was a high-volume node, reinforcing resistance strength.
This tool was plotted from the August lows to current prices, with the Point of Control at $26.36.
The daily market structure remained bearish, with the recent lower high recorded at $24.95. A daily close above this level is essential for a bullish shift in structure, but such movement seemed unlikely at press time.
Fibonacci retracement and extension levels indicated that the next target might be the 23.6% extension at $14.46.
Swing traders can look to short a temporary bounce towards $21 and set this level as a take-profit point. The bearish outlook would be invalidated if prices exceeded $22.15.
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
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