AVAX reclaims Q1 2023 highs, hits key supply level- A cool-off likely?

AVAX reclaims Q1 2023 highs, hits key supply level- A cool-off likely?

Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion 

      – The 12-hour chart was bullish.

      –  Development activity and sentiment improved.

Avalanche [AVAX] reclaimed its Q1 2023 levels of $21 – $22, completing its recovery. AVAX dropped to $14 during the U.S. banking crisis in March but has since rallied 50%. But it has also hit a stiff supply zone, which could exert downward pressure on the asset. 

Read Avalanche’s [AVAX] Price Prediction 2023-24

Meanwhile, Bitcoin’s [BTC] was below $30k at press time. Should BTC experience more downward pressure in the coming days/week, AVAX may experience a pullback and offer shorting opportunities.  

Will sellers gain entry at the supply zone?

Source: AVAX/USDT on TradingView

On the 12-hour chart, the RSI surged into the overbought zone, as did the stochastic RSI. However, the overbought condition also sets AVAX for a potential trend reversal. AVAX may experience a pullback before attempting to surge if that is the case. 

Shorting at the current level could offer a good risk ratio, especially if AVAX retraces to the intersection of ascending trendline and $18.57 support. An extended drop beyond the confluence area could settle at the $16.47 support. 

A session close above the supply zone of $21- $22 will invalidate the above thesis. However, traders should watch out for a fake breakout like the one seen in early February, which surged to $23 before dropping below the supply zone.

After $23, the immediate resistance level lay at $23.76 and $25. The ADX (Average Directional Index) surged by the time of writing, which could give bulls slight hope. 

Development activity and sentiment improved

Source: Santiment

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According to Santiment, the development activity has been rising since the beginning of April. However, a drop in weighted sentiment was registered of late.

At press time, development activity improved slightly, alongside an upswing followed by an improved sentiment. If the trend persists, bulls could attempt to clear the obstacle at $21 – $22. 

In addition, a total of $1.2m was wrecked in the past 24 hours, and short positions accounted for $1m of total liquidations. On the contrary, long positions only suffered less than $200k liquidations – reinforcing the bullish sentiment, at press time. 

Investors should track this front alongside BTC’s price action to confirm if a retracement is likely.

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