Avalanche [AVAX] has experienced a notable rally recently, with its most recent daily swing showing over 12% gains. However, technical analysts are questioning whether the uptrend can sustain itself when examined through key on-chain and charting metrics.
Liquidity Clusters Present Structural Challenge
Analysis of AVAX's 1-month liquidation heatmap reveals a concerning pattern: limited to no upside liquidity clusters exist above current price levels, while multiple clusters with strong depth sit below. Liquidity clusters represent areas of unfilled orders that can act as price magnets, pulling the asset toward these levels.
This asymmetry creates two potential scenarios. Without substantial liquidity above, AVAX may depend on sustained momentum to advance further. Conversely, the downside clusters below current prices could pull the asset lower, erasing recent gains.
Mixed Signals from Accumulation and Momentum Indicators
On-chain data shows clear accumulation activity, with the Accumulation/Distribution Indicator registering volume-weighted purchases at 122 million, suggesting ongoing investor buying. However, this signal is not decisive.
The Aroon Indicator, which tracks directional bias through two lines, confirms a bullish lean with Aroon Up above Aroon Down. Yet the gap between these lines remains minimal. Stronger bullish confirmation would require a more pronounced separation, typically with Aroon Up near 100% and Aroon Down near 0%.
Critical Technical Level Ahead
For AVAX to establish a sustained bullish structure, the price must clear key liquidity levels and achieve a decisive close above the lower high. Such a move would nullify the structural decline the asset experienced in prior weeks and reverse the established bearish trend.
Without a confirmed break above this level, technical analysts warn of potential declines from current price levels.
