Avalanche (AVAX) plunges from ATH and consolidates above $80

Avalanche (AVAX) is at risk of falling below key support in place since November 2021. This indicates a downward trend.

Price pattern

AVAX has been down since hitting an all-time high of $147 on Nov. 21 along with a descending resistance line. The line has rejected the price three times so far, most recently on May 2nd (red icon).

Despite the rejection and subsequent decline, AVAX created strong support at the $80 horizontal support area, which previously acted as resistance at all-time highs. Combined with the descending resistance line, a descending triangle forms, which acts as a bearish pattern.

However, AVAX could also move along an ascending support line (dashed line), creating a symmetrical triangle. This is considered a neutral pattern, so both breakouts and breakouts are possible.

Avalanche (AVAX)

 Source: TradingView

Future movement

The possibility of a downtrend is also supported by technical indicators, most notably the MACD.

The MACD is constructed by the short-term and long-term moving averages (MA). Now both the signal line and its histogram have moved into negative territory. This means that the short-term MA is slower than the long-term MA. It is a sign commonly associated with a downtrend.

Most recently, this happened in August 2021 (green circle) when AVAX price was near $20.

Furthermore, the RSI, which is a momentum indicator, is below the 50 level. This is also a sign of a downtrend.

If there is a breakdown, the next support is $62, that is the 0.618 Fib retracement support.

Avalanche (AVAX)

 Source: TradingView

Count waves

Trader @CryptoTony_ tweeted an AVAX chart and said that if the January 7 low holds, the token could continue to climb towards new all-time highs.

Avalanche (AVAX)

The source: Twitter

If the correction ends with the January 7th low (red line), the next move higher is likely to be a five-wave move higher. However, the rise is a triple wave structure (highlighted).

Therefore, it is more likely that the AVAX trend will remain bearish and the token will eventually break the support level.

Avalanche (AVAX)

AVAX/USDT 4 hour chart | Source: TradingView

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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