Avalanche Breaks Free from the Edge – What Happens Next After the 4-Hour Trendline Break?

Avalanche (AVAX) has recently experienced a notable decline, dropping beneath a crucial 4-hour trendline. This shift has raised alert among traders, as the asset’s previous upward trajectory appears to have stalled, creating worries about potential downward movement if buying pressure does not re-emerge.

Inability to Reclaim Levels May Lead to New Lows for Avalanche

A recent analysis highlighted that the breakdown in Avalanche indicates a shift from a bullish to a bearish trend, presenting a critical juncture for the cryptocurrency. The price has fallen below an important trendline on the 4-hour chart, which had offered significant support during the prior uptrend. This breach signals that selling activity may be surpassing buying momentum.

The analysis also mentioned that AVAX is in the process of re-testing the broken trendline. This phase is vital, often determining the confirmation or invalidation of a breakdown. Should the bullish forces succeed in driving the price back above this level, a rebound could be feasible.

On the other hand, if the trendline remains unclaimed, it could lead to a more extensive correction, potentially reaching $21 or lower. This highlights the necessity for traders to closely monitor price movements in the upcoming sessions, particularly around the re-test area, as it may influence Avalanche’s next significant movement.

Momentum Weakens as RSI Declines

Compounding the evidence for a potential bearish shift, the analysis pointed out that the Relative Strength Index (RSI) is showing signs of deterioration. A consistent decline in the RSI strengthens the notion that momentum is shifting to favor sellers, further validating the recent break of the trendline and indicating a possible loss of upward momentum.

Attention is particularly urged for price behavior between $22.80 and $23.00, a former support area now potentially acting as resistance. If AVAX fails to reclaim this zone and meets resistance, it could reinforce the bearish outlook and pave the way for additional downward movement. Traders are advised to remain vigilant and observe how the market behaves around this critical level.

The analyst advised maintaining a cautious approach and refraining from hasty trading decisions. Allowing the market to indicate its direction before committing to trades is essential, especially with Avalanche positioned at a significant level.

Currently, Avalanche is trading at around $23.74, reflecting a 6.61% price increase over the last 24 hours. This rise corresponds with a 5.72% increase in trading volume, indicating renewed market interest.