AVAX Bounce Appears Corrective With Potential Drop Toward the $8.35 Support Zone

3 mins mins

Key Insights:

AVAX failed to reclaim RSI trendline, signaling weak momentum and a possible return to $8.35 support zone.
Negative funding rates persist as short sellers dominate, reflecting cautious outlook despite short-term recovery signs.
Price faces resistance at $10.45–$12.45; without consolidation, bullish attempts remain at risk of rejection.

*AVAX Bounce Appears Corrective With Potential Drop Toward the $8.35 Support Zone*

Avalanche (AVAX) has seen a 20% bounce in price. However, some analysts are cautious, suggesting that this move may not last. Current price action shows weakness, with indicators pointing to a possible move back toward $8.35 support. Although the coin gained short-term momentum, many see the bounce as temporary rather than a change in the broader downtrend.

Persistent Downtrend Despite Recent Bounce

AVAX has seen a steady decline in price, falling from over $49 in early 2023 to under $10 in February 2024. The latest bounce from support was shallow, failing to break above any meaningful resistance. Analysts noted that the market appeared to lose interest at previous support levels.

Technical patterns suggest the rebound is part of a short-term corrective phase. Umair Crypto warns of a possible return to the $8.35 zone, where a stronger base may form if consolidation occurs. Added that “The bounce lacks strength and looks corrective.” The RSI failed to reclaim its trendline, which had been a key trigger for past upward moves.

Analysts believe that without firm consolidation near the current levels, any upside moves could face rejection. The $10.45 to $12.45 zone is seen as a possible short-term resistance before another drop. If the price cannot hold its base, the downside risk toward $8.35 remains open.

Derivatives Data Signals Bearish Sentiment

As of the time of writing, Avalanche is trading at $8.73, down 4.47% in the past 24 hours. Trading volume is over $235 million, showing that market activity remains high despite the downtrend.

However, AVAX funding rates have remained negative over the past year, showing that short sellers are still paying to hold positions. This negative trend became more visible after a sharp price drop in mid-October, according to data from Coinglass.

*AVAX funding rates | Source: Coinglass*

The open interest (OI)-weighted funding rate has shown consistent downward pressure. This suggests that many traders still favor short exposure. Negative funding rates over a long period suggest that sentiment in the futures market remains bearish. As long as this trend continues, any upside attempts could struggle to gain traction.

DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.