Avalanche (AVAX) had its price coiling up for more than two months before breaking out of the technical formation. Though the breakout is bulls, it encounters obstacles that threaten to erase all gains acquired over the previous week. Market players should concentrate on this week’s AVAX action for what the alt’s future holds.
Threats Persist despite Bullish Breakout
January 3 to March 18 sessions saw AVAX printing three distinct higher lows and lower highs while converging. Connecting the swing points with trend lines reveals a pennant.
This technical setup predicts a colossal breakout in either direction. Meanwhile, Avalanche produced a 24hr candle close beyond the topside trend-line on March 19, signaling a bullish breakout.
Nevertheless, AVAX bulls haven’t performed amid the breakout, resulting in a price stagnation that might erase the optimistic move. Furthermore, such developments might see the alternative token crashing to the value area not seen since 2021 August.
Surprisingly, the Bollinger Band Width hovered around 0.34, beyond the 0.22 local bottom. The technical indicator forecasts the token’s volatile actions. The Bollinger Band Width value reducing highlights squeeze in volatility. That condition often shows an asset where the price moves sideways or stagnates.
Meanwhile, local bottom retesting indicates imminent volatility, and the opposite is true. Enthusiasts should beware that this indicator forecasts volatile moves only and cannot determine the move’s direction.
According to the chart, Avalanche has witnessed sudden volatility surge each time the BBW indicator hit 0.22. The alt increased its probability of spiking soon as AVAX returned to the local bottom.
Meanwhile, BTC’s price actions suggest a slight drop before Avalanche embarks on its uptrend. Meanwhile, the bullish narrative will persist as long as AVAX keeps its price beyond the support area of $52.52.
The latest surge in social volume to 994 from 62 within the previous 24 hours lends credence to AVAX’s bullish outlook. The sudden surge reflects interest by retail investors in the alt at the current price, and they might buy the token. A daily candle close beneath $52.53 will cancel Avalanche’s bullishness, opening doors for a potential 60% plummet towards $20.80.
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