Akash Girimath
FXStreet
Avalanche (AVAX) price continues to produce higher highs, but the momentum indicators do not agree with it. The recent ascent seems to be built on the false footing and could trigger a steep correction for Avalanche enthusiasts.
AVAX price has gained 40% between June 10 and 25 and set up a range, extending from $9.65 to $14.25. Although Avalance (AVAX) came close to retesting the range high, signs of exhaustion are getting clearer by the hour.
Between June 21 and 25, AVAX price set up three distinctive higher highs, but during the same time, the Relative Strength Index (RSI) and Awesome Oscillator (AO) set up lower highs.
This non-conformity is termed “bearish divergence” and indicates that the momentum is not behind this recent ascent. The technical formation is a sell signal and often leads to a correction in the underlying asset.
For AVAX price, the correction will likely knock the altcoin down by 11% to tag the aforementioned range’s midpoint at $11.95. This move is a perfect opportunity for short-sellers, which stand to gain by this 11% move to the downside.
AVAX/USDT 4-hour chart
Despite the recent recovery rally, AVAX price has shown multiple sell-signals, which are logical. Due to short-term sellers booking profits, the bearish thesis makes sense. But if Bitcoin price resumes its bullishness at the start of a new week, things could turn ugly for bears.
In such a case, a four-hour candlestick close that flips the range high at $14.25 will invalidate the bearish thesis for AVAX price. This development could see the altcoin attempt to retest the $16.46 hurdle.
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