Avalanche (AVAX) Shows Signs of a Potential Rally After Enduring Months of Aggressive Corrections

Currently trading at $23.43 when writing, AVAX has recently broken past a critical resistance level at $22.80, confirming a structural shift in the daily timeframe.

After enduring months of aggressive corrections, Avalanche (AVAX) is showing signs of a potential rally. Currently trading at $23.43 at the time of writing, AVAX has recently broken past a critical resistance level at $22.80, confirming a structural shift in the daily timeframe.

This move marks a significant change in momentum for the token, which has experienced an ongoing correction since its all-time high in March. After a prolonged period of decline, AVAX is now displaying strength, catching the attention of analysts and investors. Many anticipate a bullish surge in the coming months as the token begins recovering from its extended downturn.

AVAX Correction May Be Over

Since March, Avalanche has experienced an aggressive correction, shedding over 70% from its all-time high. However, many analysts believe this downward trend may have finally ended, setting the stage for a new rally.

Crypto analyst and trader Dom from X highlights AVAX’s price action within a clearly defined 6-month descending channel—a pattern often associated with a bullish reversal. But as Dom notes, such a reversal is only confirmed when the bearish structure breaks in higher timeframes.

Dom is keeping a close eye on the $25 psychological level as a critical point of confirmation. A sustained move above this level would signal a stronger bullish shift and could trigger significant upward momentum for AVAX.

As the L1 blockchain shows signs of recovery, analysts are increasingly optimistic about its prospects in the coming months. With the token trading around a key indicator, the market is closely watching for further confirmation of a bullish trend.

However, before any rally can continue, the price needs to test an important liquidity level. The outcome of this test will be crucial in determining whether the recent upward momentum can be sustained or if further consolidation is needed.

Price Consolidation Around Key Level

Avalanche is currently trading at $23.43 and is testing the 4-hour (4H) 200 exponential moving average (EMA), a key technical indicator that hasn’t been challenged since July 29. This level is significant as it often acts as a dynamic resistance in the market. If AVAX can consolidate above this 4H 200 EMA, bulls might aim for the next target at $25.88, a critical level that could further confirm the uptrend.

But if the price fails to close above the 4H 200 EMA, it will likely revisit the previous high at $22.80 as the next logical level to test. The coming days will be crucial in defining AVAX’s price action as the market watches closely for either a sustained rally or a potential pullback. With the right momentum, there’s potential for future gains.

Cover image from Dall-E, charts from TradingView.

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