Avalanche [AVAX] has rallied by 5.95% in the past 24 hours. It was one of the few tokens in the top 50 crypto assets by market capitalization that have made noticeable gains in recent trading sessions.
However, the altcoin’s daily trading volume was down by nearly 8%. This was a sign that Spot buying was not as strong as the bulls would want it to be. The fragile bounce was accompanied by only a 3.3% increase in Open Interest.
Speculative traders’ reluctance to chase the move was another indication of AVAX’s fragility. Here’s a deeper dive into the token’s long-term price trends.
AVAX bounces from oversold conditions made earlier in June
In February, AVAX set a swing low at $7.55, which it breached in the first week of June. This bearish structural break originated at the $10.55 high made in March, and the move reached a low of $5.68.
Hence, these two levels were used as the anchor points for a set of Fibonacci retracement levels. At the time of writing, AVAX was approaching $6.83, the 23.6% retracement level.
The $6.8 area has served as a local resistance zone over the past three weeks. Until it is surpassed, short-term bulls will want to stay away from entering long positions.
Swing traders will want to wait for a much bigger bounce to sell into. Key retracement levels at $8.11, $8.69, and $9.51 will be the targets to watch out for.
Traders’ call to action – Wait
The 4-hour structure was firmly bearish, and AVAX’s bounce has strayed into the golden pocket between the 61.8% and 78.6% retracement levels plotted based on this timeframe’s swing move.
It was a clear sell signal. Additionally, the $6.8-$7.0 area has been a local supply zone. At the same time, traders should remember that Avalanche token prices could bounce toward $8 before the next higher timeframe bearish move.
Sellers at the $6.8 area should be ready to cut their losses in case the bounce goes higher than expected.
Final Summary
- The relative bullish strength of Avalanche in the short term might not last much longer, given the weak volume and price structure.
- Swing traders can wait for a bigger bounce before entering positions with conviction. Presently, the risk-to-reward was too little to take action.
