Why could AVAX rally 24%?

Avalanche price retests its trendline support area at $26.34, with potential recovery on the cards.
On-chain data shows AVAX's development activity is growing, suggesting a bullish move ahead.
A daily candlestick close below $21.99 would invalidate the bullish move.

Avalanche (AVAX) price bounced off the $26.34 support level to trade at $27.95 as of Friday. Growing on-chain development activity indicates a potential bullish move in the coming days.

Avalanche looks promising for a rally ahead

Avalanche price faced rejection by the daily resistance at $32.66 earlier this week, extended the correction move for the fourth day in a row and retested the trendline support at $26.34.At the time of writing, AVAX bounced off the trendline support and trades higher by 2%, around $27.95, on Friday.

If the $26.34 level holds, AVAX could rally 24% to retest its daily resistance at $32.66.

The Relative Strength Index (RSI) on the daily chart has briefly slipped below the 50 mid-line, while the Awesome Oscillator (AO) is on its way to doing the same. If bulls are indeed making a comeback, then both momentum indicators must maintain their positions above their respective mean levels. Such a development would add a tailwind to the recovery rally.

AVAX/USDT daily chart

Based on IntoTheBlock's In/Out of the Money Around Price (IOMAP), nearly 147,960 addresses accumulated 1.24 million AVAX tokens at an average price of $27.43. These addresses bought Avalanche tokens between $26.99 and $27.78, which makes it a key support zone.

Interestingly, the $26.99 to $27.78 zone mentioned from a technical analysis perspective coincides with the IOMAP findings, making this zone a key reversal area to watch.

AVAX IOMAP chart

Santiment's Development Activity index shows project development activity over time based on several pure development-related events in the project's public GitHub repository.

In AVAX's case, the index sharply rose from 179 on July 22 to 188 on July 25. This trend has been rising since July 16 and implies that the Avalanche price-developing activity is high, which adds further credence to the bullish outlook.

AVAX Development Activity chart

Even though on-chain metrics and technical analysis point to a bullish outlook, if AVAX's price makes a daily candlestick close below $21.99, the bullish thesis would be invalidated by creating a lower low on the daily chart. This development could see Avalanche's price decline by 11% to retest its daily low of $19.47 from November 28, 2023.

Share: Cryptos feed

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.