AVAX Risks Breakdown

Avalanche (AVAX) was one of the early risers of the current market cycle, soaring over 600% between October 2023 and March 2024.

Avalanche (AVAX) was one of the early movers of the current bull market, rising over 600% between October 2023 and March 2024.

However, momentum has faded, and AVAX has trended downward since then. A failed breakout attempt ended in December, and AVAX has fallen over 60% since then. With the price risking a breakdown from a critical support area, it is worth examining its price movement to see if the bull market is salvageable.

AVAX Risks Breakdown

The weekly time frame shows that the AVAX price broke out from the $21 horizontal resistance area in 2021, confirming the start of its bullish trend.

However, the breakout did not generate the expected upside momentum. It culminated with a high of $65.39 in March 2024, and the price has trended downward since then.

Another failed attempt at beginning an upward movement led to a lower high of $55.79 (red icon), after which the price started another decline. This week, AVAX returned to the $21 horizontal area. While the price bounced in this area in July (green icon), it could break down this time.

Technical indicators are bearish. The Relative Strength Index (RSI) and Moving Average Convergence/Divergence (MACD) are falling. The RSI is below 50, and the MACD is in negative territory.

So, the weekly time frame suggests AVAX will break down from the $21 horizontal area. The next long-term horizontal support is at $11.

There are some positive news about AVAX, such as the founder and CEO being appointed to the board of the Commodity Futures Trading Commission (CFTC) and the rebrand of the Core Wallet.

However, the absence of AVAX from Donald Trump’s proposed strategic crypto reserve did not go unnoticed.

With that in mind, let’s examine the wave count and determine whether AVAX can bounce before it reaches it.

Where Will AVAX Bottom?

The wave count suggests AVAX is in wave C of an A-B-C structure that started with the cycle high of $65.39 in March 2024. Since the decline follows a five-wave upward movement (green), it is likely corrective.

The first potential target for the drop is $14.56, created by giving wave C the same length as wave A. The target also coincides with the channel’s support trend line.

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The sub-wave count is in black, which shows that AVAX has started the fifth and final wave of the downward movement, which will complete wave C. The breakdown from the $21 area will confirm the final portion of wave C is underway.

While wave C may extend and become longer than wave A, the 1:1 ratio coincides perfectly with the channel’s support trend line, which makes it more likely to act as the bottom.

Alternatively, a strong bounce that takes the price above the channel’s midline will invalidate the bearish prediction and take AVAX toward the channel’s resistance at $50. This currently seems unlikely.

AVAX Drops Below $20

The trend of the token has been bearish since March, confirmed by the lower high created in December and the ensuing decline.

A close below the $21 horizontal support area will likely trigger another 30% drop for AVAX, taking it to $14.50.