- Avalanche (AVAX) price dropped 12.9% in the past day, but the long-term outlook remains bullish.
- Technical indicators suggest a potential for further price dips in the short-term, however, continued buying pressure and established support zones could lead to a quick recovery.
Avalanche (AVAX), a popular smart contracts platform, has experienced a price correction in the past 24 hours. While the long-term outlook remains positive, technical indicators suggest a potential for further dips before a potential rebound.
Recent Price Drop and Momentum Divergence
AVAX’s price dropped from $65.39 to $56.89 within the last day, reflecting a 12.9% decline. This pullback coincides with a bearish divergence on the Relative Strength Index (RSI) on the daily timeframe. The RSI indicator measures momentum, and a bearish divergence occurs when the RSI forms lower highs while the price creates higher highs. This suggests weakening momentum behind the price increase, potentially foreshadowing a correction.
Counterpoint: Buying Pressure and Demand Zones
However, there are some mitigating factors. The On-Balance Volume (OBV) indicator remains on an upward trend, suggesting continued buying pressure despite the price drop. This indicates that any pullbacks might be temporary, with potential for quick recoveries. Additionally, the $48 level on the daily chart, previously a resistance zone, could now act as support due to increased buying interest at that price point.
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Liquidity Levels and Potential Targets
Analyzing the liquidation heatmap data from Hyblock, a crypto analytics tool, reveals potential price targets for AVAX. While the $65.8-$66 region remains a bullish target, the more realistic short-term targets lie around $48.15 and $45.94, given their proximity to established demand zones.
Impact of Bitcoin and Long-Term Outlook
The overall market trend, particularly Bitcoin’s (BTC) price movement, will significantly influence AVAX’s trajectory. If Bitcoin experiences a significant downward correction in March, it could drag the entire crypto market south, potentially pushing AVAX below $50. However, it’s important to remember that the long-term uptrend for AVAX is still considered intact. A drop below $34.83 would be required to invalidate the bullish thesis and signal a potential shift towards a bearish market structure.
Investment Strategy
For investors with a long-term perspective, a temporary dip below $50 could present a good buying opportunity. However, those seeking short-term gains might want to wait for confirmation of a reversal before entering the market.
