Declines mostly engulfed the cryptocurrency market on Monday and Tuesday, as crypto prices flashed red. Major assets like Bitcoin and Ethereum continue their declines, dropping 1.16% and 0.57% respectively, on the day. Avalanche retreated further to $15.5, affirming the bear’s grip on the price
A Double Top Pattern Projects Avax Return To $13
Avalanche, one of the leading Layer 1 tokens in the market, gained 51% of its value to sent a swing high at $21.57 on April 18. However, a seller congestion at this level prevented buyers from reaching the critical $25 psychological level.
Thus, a correction took place below several potential support areas like the 100-day Simple Moving average at $17.98 and the 50-day SMA at $17.31.
Two recovery attempts have been made but they have been turned town by the 50-day SMA. The latest rejection led to a steep decline that saw AVAX lose a critical support level provided by the 200-day SMA at $16.13 on Monday.
Note that the sharp drop may have been caused by two scenarios; one would be profit-taking moves among investors and the second might be the general bearish picture in the market over the last two days.
It is worth mentioning that although the dip was sharp and damaging to the progress made since March 10, Avalanche seemed to have settled above $15.4. The $15 psychological level cemented the zone ensuring that it was solid enough to withstand the pressure.
AVAX/USD Daily Chart
However, the price action had formed a double top at the $21.57 level. This appears to be a significant supplier congestion area given that the price was rejected from the same level in February. AVAX then went on to plummet 35% to set a swing low at $13.88.
The recent downtrend is also as a result a rejection from the same level. Therefore, if history was to repeat itself, Avalanche still has to complete the retracement toward $13.88. This would represent a 10.43% descent from the current price.
This gloomy outlook was supported by the relative strength index (RSI) which was moving in the negative region, suggesting that the sellers were in control of the price. If this trend-following indicator continues to move down to cross the 30 line into the oversold region, it would suggest that the bears are aggressively selling on the rally to the 50-day SMA.
In addition, the Moving Average Convergence Divergence (MACD) indicator was moving doward and had just crossed the zero line into the negative region. This suggested that the market sentiment favoured the downside.
On the Flipside, buyers could lift the AVAX price from the current levels to areas above the 200-day SMA at $16.13, to confront resistance from the 50-day SMA. Shattering this barrier could see the Avalanche token climb higher to tag the $20.0 psychological level, representing a 28.5% rise.