Avalanche (AVAX) could increase 60% after a bull flag erupted

Avalanche (AVAX) has strengthened for a potential rally towards USD 160 after breaking a classic bullish pattern earlier this week.

This pattern, known as the “bull flag” occurs when the price consolidates down / sideways after a strong upward movement (flagpoles) between two parallel trend lines (flags). Then the price theoretically breaks out of the channel area to continue the uptrend and moves around the height of the flagpole.

AVAX has seen similar price action over the past 30 days, including a nearly 100 percent flagpole rally to nearly $ 150, followed by a more than 50 percent correction to $ 72 and a breakout above the upper trendline of the Flag (about US $ 85) on December fifteen.

AVAX / USD daily frame price chart with bull flag pattern | Source: TradingView

AVAX price continues to rebound after breaking out of bull range on Friday (December 17) and hitting near $ 120 but is aiming for the next target near $ 160. That level comes after adding the flagpole height of around $ 75 from the current breakout point near $ 85.

One week price increases

The recent rally in the avalanche market was also supported by a number of positive catalysts this week.

AVAX gained nearly 10.5% on Tuesday (December 14th) when Avalanche added a native version of USDC, a dollar-linked stablecoin issued by Circle, to its blockchain.

Additionally, Avalanche was identified as a potential alternative to leading smart contract platform Ethereum in a report released December 10 by Bank of America. This coincided with a 16% increase in AVAX.

AVAX / USD daily frame chart with the most important events of the week | Source: TradingView

On Thursday (December 16), AVAX rose to a two-week high after receiving it notification Supported BitGo, a cryptocurrency management company with over $ 64 billion in assets under management.

A small sell-off pushed AVAX down. However, it recovered soon after Avalanche notification has teamed up with the Web3 accelerator DeFi Alliance to bring a game accelerator to market on Friday.

All of the above events are geared towards the growth of the Avalanche ecosystem. With USDC, for example, the project promises to offer a viable alternative to Ethereum’s expensive stablecoin tether (USDT) transactions.

Additionally, with BitGo as its custodian, Avalanche appears ready to serve accredited investors. Mike Belshe, CEO of BitGo explains:

“Not all retail custody is created equal, and the BitGo wallet was designed from the ground up to meet the needs of institutional investors. BitGo is the only independent qualified custodian focused on building the right market structure and setup to enable institutions to move confidently into the digital asset space. ”

Price risk

One of the main risks to AVAX could be related to overall market performance.

In particular, AVAX rebounded while its total crypto market cap lost over $ 114 billion, with top crypto assets like Bitcoin and Ether falling 7% and 5% respectively. Concerns about the US Federal Reserve’s tapering plan triggered the market sell-off.

Hence, it appears that traders have viewed AVAX as their short-term hedge against the collapse in the crypto market, which is mainly being driven by a range of positive news.

AVAX / BTC Weekly Frame Price Chart | Source: TradingView

Additionally, the AVAX / BTC pair has so far rebounded nearly 40% to 0.00245 BTC, with the Relative Strength Index (RSI) entering the overbought zone. This could result in AVAX weakening against BTC in the coming sessions.

A similar outcome is possible in the case of AVAX / USD as its weekly RSI has also risen to near overbought levels.

AVAX / USD Weekly Frame Price Chart | Source: TradingView

However, AVAX / USD is likely to maintain the uptrend as long as it holds the 20 week exponential moving average as support. As the graph above shows, the green wave has stopped AVAX’s downward attempts since August 2020.

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Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.

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