Avalanche (AVAX) is trading inside a bullish pattern since May 12. A bullish RSI reading suggests that it will soon make its fourth breakout attempt.
AVAX has been declining since reaching an all-time high of $151.22 in November 2021. The downside movement reached a June 2022 low of $13.72. This was a drop of 89% measuring from the high.
The price is approaching the $12 horizontal zone. This is an important area as it first acted as resistance in August 2020 and then turned support in July 2021.
Will AVAX break?
The daily chart shows that the price is falling inside a descending wedge since May 12. A descending wedge is considered a bullish pattern, which means that a breakout would be expected.
Additionally, the daily RSI has generated a bullish divergence, supporting the possibility of a breakout.
Subsequently, the six-hour chart supports the search from the daily chart.
Similar to the daily, the RSI has generated a bullish divergence during the two most recent touches of the support line.
Currently, the price is approaching the wedge resistance line at $20.
For a bullish reversal to be confirmed, AVAX needs to break out of the wedge and later retest the $22 area.
wave count analysis
cryptocurrency trader @JacobEmmerton Tweeted a chart from AVAX, which suggests that there will be a strong upward move once the current shortfall is completed.
Since the tweet, the target has been reached and AVAX has since jumped significantly.
For future movement, there are two main possibilities.
The first suggests that the current rise is part of wave four of a five-wave downward movement (black). In this case, the price is expected to rise to $39, but then make another low.
The second indicates that the price has already completed a five-wave downward movement and has now started a long-term bullish trend reversal. In this case, the price will break the wedge and rise above $39.
In any case, it looks like a short-term breakout is very likely, and therefore a longer-term low. If the entire decline since the all-time high is an ABC corrective formation, then waves A:C will have a 1:1 ratio to a low of $10.10, which is slightly above the current low.
So, it looks like a bottom is too close.