Disclaimer: The information presented does not constitute financial, investment, trading or other advice and represents the opinion of the author only.
- Avalanche looked poised for another drop in the price charts
- A bounce towards $14 cannot be discounted but may present an opportunity for sellers
Avalanche reversed its market structure from bullish to bearish earlier this month following the market-wide selling pressure seen recently. Bitcoin fell from $21.5k to $16.2k and could drop further.
Read Avalanche Price Prediction 2023-24
More aggressive short-term traders may look to bet on some bullish days. However, more risk averse traders can wait for an opportunity to sell, with a clear invalidation presented on the charts. Avalanche’s TVL has recently moved higher, but could this be a near-term bullish catalyst for AVAX?
Market structure was bearish as sellers remain aggressive
On the 12-hour chart, AVAX broke below the bullish order block at $14.5 on November 9. It flipped its structure from bullish to bearish on November 8 when the price broke a recent higher low. Around the same time, the Relative Strength Index (RSI) took a nosedive as bearish momentum took control of the market.
Chaikin Money Flow (CMF) and On-Balance Volume (OBV) were also hit hard as selling pressure increased tremendously. The bearish outlook has not changed yet. The Fibonacci retracement and extension levels showed that the next support level to watch is $10.06. It was also an important psychological level.
For more conservative longer-term traders, the bearish circuit breaker in the $15 region may be a place where they can look to enter short positions. More aggressive traders can view the $14 area as a place to enter short positions. In both scenarios, the inference was that AVAX will face strong selling pressure near these levels. Invalidation would be a session close above $14.06 for the most aggressive entry and above $16.01 for the conservative approach.
Negative funding rate as futures participants bet on lower prices
Development activity has increased in recent days and that’s the only positive takeaway for long-term investors. Social dominance has been somewhat stable over the past few months with sporadic surges up to the 0.7% mark.
Turning to the futures market, traders appeared to be positioned lower as the funding rate plunged into negative territory. Open interest has also trended lower over the past couple of weeks.
Technical factors and sentiment were strongly in favor of the bears. This does not mean that a rebound towards $14 or even $15 will not occur. Instead, longer term traders can look for a retest of these regions to look for short selling opportunities with good probability.