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Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
- AVAX has extremely strong bullish momentum and sparked debate about being overextended
- Breach of the $30-zone was critical for long-term investors
Avalanche [AVAX] has been one of the best-performing large-cap altcoins in December. In fact, it gained by just over 62% this month before the recent plunge to $32. The move past the long-term resistance and psychological round number at $30 was a sign of intent from the crypto’s buyers.
A recent AMBCrypto report noted that a significant portion of AVAX holders were in profit. The market sentiment was also reported to be firmly bullish, a fact that remains true today.
Avalanche bulls late to the party got punished on Monday
Source: AVAX/USDT on TradingView
Technical analysis of the higher timeframe price charts of Avalanche highlighted that the token was extremely bullish. It has been in “up-only” mode since early November. There was some consolidation around the $20-mark towards the end of November, but December brought new highs.
In August 2022, AVAX set a monthly high of $30.89. The $28-$30 zone represented a strong resistance area as it had been where Avalanche consolidated a year ago, before falling steeply. Over the past few days, this supply zone was smashed to pieces as bullish strength appeared unstoppable.
The RSI was at 84 to signal the same and the On-Balance Volume swelled higher and higher to capture the high buying volume in recent weeks. The $41-$44 region is expected to act as resistance next. Meanwhile, it remains unclear if we would get a retracement to $30 or lower yet.
A pocket of liquidity upward, will we see a sweep and reversal?
Prices are attracted to liquidity. AMBCrypto’s analysis of the liquidation levels data from Hyblock highlighted the importance of the $34 and $38 territories. More specifically, the $34.2 and the $37.75-$38.3 regions are likely to be the next support and resistance areas of significance.
How much are 1, 10, or 100 AVAX worth today?
A move north to trigger short liquidations before a reversal from $38 is possible. And yet, given buyer strength recently, it does not make sense to short the token based on the higher timeframe charts. Instead, swing traders can wait for a sizeable drop to $30 or lower before buying.