Avalanche [AVAX] Drops 14% in February, Faces 20% Resistance
1min read Avalanche [AVAX] has been on a downward trajectory, with technical analysis highlighting the $20 area as a significant resistance zone for bulls. Despite a minor price bounce predicted in early March, the downtrend has continued, leading to a price drop to $15.2 a week later. The bearish outlook persists as demand has not been robust enough to reverse the downtrend, and strong resistance zones remain overhead.
Ask Aime: What factors are driving the price decline of Avalanche (AVAX)?
The November rally was fully retraced by February 24, and since then, Avalanche has lost an additional 14% in value. The 20 and 50-period moving averages have shown consistent downward momentum, with the 20 DMA acting as dynamic resistance to the price over the past two weeks. At the time of reporting, the 20 DMA was at $20.29. The $20-$21.7 region has formed a resistance zone, acting as a bearish order block. Any price bounce in avax is likely to encounter selling pressure in this area.
The Fixed Range Volume Profile tool further strengthens the resistance, showing that the $20.5-$22.1 area is a high-volume node. This tool, plotted from the August lows to the present, marks the Point of Control at $26.36. The daily market structure remains bearish, with the recent lower high set at $24.95. A daily session close above this level is required to shift the structure bullishly, but such a move appears unlikely at present.
The Fibonacci retracement and extension levels indicate that the 23.6% extension level at $14.46 is the next target for bears. Swing traders may consider selling a short-term price bounce toward $21 and targeting this level as a take-profit. However, the bearish idea would be invalidated if the price could climb above $22.15. The demand for AVAX has not been strong enough to coax it out of its downtrend, and firm resistance zones remain overhead. Swing traders might want to look for short entries or remain sidelined for the coming days.
