AVAX bulls eye return to $80 before pushing Avalanche towards new all-time highs
|- AVAX price consolidates after significant outperformance of the aggregate cryptocurrency market.
- Traders and investors digest Coinbase listing news and contemplate direction and valuation.
- A breakdown below a highly bearish pattern fails to generate an expected sell-off.
AVAX price continues to display resilience and strength. Easily one of the best performers of 2021, AVAX may continue to consolidate before beginning another expansive move.
AVAX price looks for a return to $80 before creating new all-time highs; mean reversion trade setup likely in the interim
AVAX price broke down below one of the most robust and bearish chart patterns in technical analysis: the rising wedge pattern. The initial break below the lower trendline of the rising wedge was a signal that many bears were looking to capitalize on – and many bulls were hoping would play out so they could dollar-cost average back in. But, instead, AVAX has consolidated and tested the lower trendline of the rising wedge four times.
While the current AVAX price action remains bullish, one look at the weekly Ichimoku chart shows a glaring issue within the Ichimoku Kinko Hyo system. There is a substantial and persistent gap between the current close and the weekly Tenkan-Sen, which is at $47. Significant gaps between the close and the Tenkan-Sen do not last long within the Ichimoku system and often correct very swiftly. Therefore, it is only a matter of time before a strong mean reversion correction will push AVAX lower to test the Tenkan-Sen as support.
AVAX/USD Daily Ichimoku Chart
However, a mean reversion is not necessarily a certainty. The least likely scenario – but a scenario nonetheless – is for AVAX price to pause and consolidate further until the Tenkan-Sen ‘catches up’ and moves higher towards the current $66 level. It would take several weeks of consolidation for the Tenkan-Sen to return to where AVAX is currently trading.
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