Avalanche’s wedge has approached a pivotal moment on the hourly chart. If the hourly 200-SMA halt its progress, AVAX would be in danger of slipping back to $50 post a breakdown. At the time of writing, AVAX traded at $68.6, up by 6% over the last 24 hours.
AVAX Hourly Time Frame
AVAX’s recovery has been consistent with most mid-caps in the altcoins market. Between 24-26 January, its price rose by 27% amid healthy buy volumes. However, bulls cannot afford to take their foot off the gas as AVAX’s wedge approached an important test at the hourly 200-SMA (green). The long-term moving average line clashed with a possible double-top setup around $71, making a breakout quite tricky to achieve.
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Buy volumes have also tapered off over the past few sessions and the same was not an encouraging sign for those expecting an upwards breakout. If AVAX does not register a complete 4-hour candle above $71, sellers would respond with a breakdown of their own. A severe correction would see AVAX decline by 23%-25%, followed by a test of $51-$53 support.
If the unlikely event of a breakout, the upside would be limited to a supply zone between $77-$80. Bulls would need to be supported by a broader market recovery to flip this zone to demand once again.
Indicators
The hourly Awesome Oscillator flashed an early sell signal after creating two lower peaks above the half-line. Meanwhile, the MACD maintained a near-term bearish outlook as the Signal line (orange) traded above the Fast-moving line (blue).
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Conclusion
Considering weak readings on the hourly indicators, Avalanche’s wedge was likely to witness a breakdown heading forward. Traders can take up short-positions once AVAX closes below the lower trendline and hourly 20-SMA (red). Take-profits can be set up at $53 while a stop-loss should be maintained at $73, slightly above the hourly 200-SMA