A pointy upside retracement within the Avalanche (AVAX) market this week has raised its potentialities to rise by one other 100% in Q2.
Avalanche chart portray a ‘bull flag’
The bullish outlook primarily seems within the wake of AVAX’s multi-month bull flag setup, which shaped after a robust value transfer increased to over $150, an all-time excessive within the Avalanche market. Intimately, the setup is a downward sloping channel, denoted by two parallel trendlines towards the earlier development, with volumes declining to underscore a weakening downtrend.
In an ideal situation, bull flags resolve with a breakout transfer above their higher trendlines, adopted by an prolonged uptrend, with the revenue goal at size equal to the dimensions of the underlying asset’s earlier uptrend (additionally referred to as flagpole).
That might have AVAX’s price to undergo a similar upside move within the coming weeks, starting with a detailed above its interim resistance of 20-week exponential transferring common (20-week EMA; the inexperienced wave within the chart above) and later with a breakout above the flag’s higher trendline.
Consequently, AVAX could eye a run-up in direction of $157, up greater than 100% from its present costs close to $77.
AVAX value draw back dangers
The most recent bout of shopping for within the Avalanche market has appeared largely attributable to its robust optimistic correlation with Bitcoin (BTC).
Notably, AVAX and BTC have been transferring in tandem virtually completely firstly of 2022, with their correlation coefficient popping out to be between 0.90 and 0.99. Nevertheless, as of March 17, the studying had corrected to round 0.79, nonetheless underscoring Avalanche’s continued desire of mirroring the benchmark cryptocurrency’s strikes.
Nonetheless, the correlation uncovered AVAX to the identical draw back dangers that Bitcoin has been dealing with since November 2021, together with Federal Reserve’s quantitative tightening and the ongoing Ukraine-Russia conflict.
On March 16, Fed’s chairman Jerome Powell said that the U.S. economic system is powerful sufficient to bear increased rates of interest as he introduced the central financial institution’s first price hike since 2018.
In the meantime, Joel Kruger, a strategist at crypto alternate LMAX Digital, famous that the central banker’s hawkish tone may strain Bitcoin into falling additional away from its all-time excessive of $69,000.
“Charges going increased will strangle fairness markets. So if we see a mass exodus out of threat belongings, it will weigh on every part,” he told Bloomberg, stressing that Bitcoin may fall to $20,000, thus contributing “to a decline in crypto belongings.”
Consequently, AVAX’s bullish outlook dangers invalidation so long as it tails Bitcoin’s value precisely. That might imply a possible value pullback from its interim resistance degree of round $80, coinciding with the 0.618 Fib line of the Fibonacci retracement graph drawn from $9-swing low to $152-swing excessive.
If the correction happens, AVAX’s subsequent help line seems on the 0.786 Fib line round $64.
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