Avalanche (AVAX) price analysis 9 Feb: Time to book profits?
Avalanche may slide very soon, so you might want to get out of the way
After a brutal January, when Avalanche’s AVAX token dropped by more than a third, the coin made an impressive comeback in February and has risen roughly 25%.
Return of confidence in the crypto sector has boosted Avalanche’s total value locked (TVL) to $10.7 billion, according to data from the analytics platform DeFi Llama. This makes Avalanche the fourth-largest blockchain in terms of TVL, ahead of Fantom, which has a TVL of $8.65bn.
A report from Messari titled “State of Avalanche Q4 2021” highlighted the fast growth in the blockchain in Q4 of last year. “On aggregate, Avalanche finished Q4 averaging about 475k transactions per day, a number that is almost 40% of Ethereum’s roughly 1.25 million average transactions per day,” the report said.
Along with slow transaction speeds, one of the other main reasons for the shift away from Ethereum has been high transaction fees. The report said that Avalanche’s increase in transaction volume resulted in spikes in transaction fees. However, compared to “Ethereum’s Q4 daily high of $62 per transaction,” Avalanche customers, during its peak had to only shell out an “average of $3 for their requests,” according to Messari’s researchers.
Could the crypto recovery boost prices further? Could AVAX go up or will it face profit-booking? Read the AVAX price analysis to find out what the charts suggest.
Avalanche technical analysis: weekly chart
AVAX’s price found support in the zone between the 50% Fibonacci retracement level at $69.58 and the 61.8% retracement level at $55.68. This suggests that lower levels continue to attract buyers.
The relief rally has risen above the breakdown level of $86.35 and could now reach the downtrend line, where the bears may offer a stiff resistance. However, the relative strength index (RSI) is in the positive territory, suggesting that bulls have a slight edge.
A break and close above the downtrend line will be the first sign that the corrective phase could be over. The AVAX/USD pair could then start its march toward the overhead resistance at $115.02.
What is your sentiment on AVAX/USD?
Conversely, if the price turns down from the downtrend line, it will suggest that bears continue to sell on rallies. They will then attempt to pull the pair to the recent low at $64.83.
Avalanche technical analysis: daily chart
AVAX’s price has been trading inside a descending channel pattern for the past few days. The bears attempted to pull the price below the support line of the channel but failed. This indicates that bulls are defending this level aggressively.
The buyers will now attempt to push the AVAX/USD pair to the resistance line of the channel, where the sellers are likely to mount a strong defence. If the price turns down from this level, the pair could extend its stay inside the channel for a few more days.
Contrary to this assumption, if bulls drive and sustain the pair above the channel, it will signal a possible change in trend. The pair could then start its northward march toward the psychological level at $100 and later to $114.
If the price turns down from the current level, the pair is likely to find support in the zone between $77 and $73.
Avalanche: Buy or sell at current levels?
Avalanche’s price analysis could face resistance in the zone between $92.98 and $95.94. If the price turns down from the overhead zone, the pair could drop to the support zone between $77 and $73.
Whatever the outcome might be, your decision to trade depends on your attitude to risk, your expertise in this market, the spread of your investment portfolio and how comfortable you are about losing money. This analysis does not constitute investment advice. It’s important to make your own analysis before deciding to invest. You should never invest more than you can afford to lose.
