Disclaimer: The information presented does not constitute financial, investment, trading or other types of advice and is the opinion of the author only
- The avalanche seemed poised for another drop in the price charts
- The bounce to $14 cannot be discounted but could present an opportunity for sellers
The avalanche reversed the market structure from bullish to bearish earlier this month after the recent market-wide selling pressure. Bitcoin crashed from $21.5000 to $16.2000 and it could drop again.
Read the 2023-24 Avalanche Price Forecast
The more aggressive traders in the lower time frame can try to bet on two bullish days. However, risk averse traders can wait for a short opportunity, with clear cancellations displayed on the charts. TVL of Avalanche has seen some progress lately, but could this be a short-term bullish catalyst for AVAX?
The market structure was bearish with sellers still aggressive
On the 12-hour chart, AVAX broke below the ascending demand block at $14.5 on November 9. It reversed its structure from bullish to bearish on November 8 when the price broke below a recent higher low. Around the same time, the Relative Strength Index (RSI) declined as bearish momentum dominated the market.
Chaikin Money Flow (CMF) and On-Balance Volume (OBV) also took a big hit as selling pressure increased significantly. The bearish outlook has not changed yet. The Fibonacci retracement and extension levels showed the next support level to watch out for at $10.06. This was also an important psychological level.
For conservative higher time frame traders, a break down in the $15 region could be a place where they can look to enter short positions. Stronger traders in the area may see $14 as a place to enter short positions. In both scenarios, the conclusion was that AVAX would experience significant selling pressure near these levels. A cancellation would be to close the session above $14.06 for the more aggressive entry and above $16.01 for the conservative approach.
The funding rate is negative as the range participants invest at lower rates
Development activity has been picking up in recent days and that was the only positive thing long-term investors left out. Social Dominance has been fairly stable in recent months with sporadic increases to 0.7%.
As for the futures market, traders looked bearish as the funding rate fell into negative territory. Open interest has also been on a downward trend over the past two weeks.
Technical factors and general sentiment were strongly in favor of the Bears. This does not mean that a bounce towards $14 or even $15 will not happen. Alternatively, longer time frame traders can look for a retest of these areas to look for good probability shorting opportunities.