AVAX: Can this Fib retracement level provide support again?
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With selling pressure easing at a key Fib level, can bulls seize the opportunity to rebound?
Selling pressure eased off at key Fib level.
However, a lack of bullish support in the futures market could extend to a bearish trend.
Avalanche [AVAX] has come under selling pressure amidst the faltering price action of Bitcoin [BTC]. Gains of 29% in July saw AVAX break the lower low of the bearish market structure. However, the recent pullback from the $16 price zone has almost erased those gains.
If Bitcoin continues to remain under $29k, the likelihood of further dips for AVAX will become higher.
Can the 61.8% Fib serve as a rebound level for bulls?
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Source: AVAX/USDT on Trading View
Analyzing AVAX’s price movement highlighted the weakening bullish conviction. The Relative Strength Index (RSI) dipped below neutral 50 on 21 July and hasn’t recovered. This underlined the sellers’ advantage under press time market conditions.
Capital inflows also stagnated over the same period, as highlighted by the Chaikin Money Flow hovering around the zero mark.
The price action showed an easing of the retracement at the 61.8% Fib level ($12.30). A gentle bounce off the level hinted at some buying power available to bulls with a look southwards revealing that bulls had rallied off this level early in July.
However, the overall sentiment for AVAX remained bearish, given the on-chart indicators and dipping BTC.
The inability of the bulls to defend the 61.8% Fib level ($12.30) could lead to a drop to the 78.6% Fib level ($11.29). That could give bulls a better rallying chance, as evidenced by the price action at that level on 20 June.
Conversely, bulls can target the 38.2% Fib level ($13.72), if the 61.8% Fib support holds and BTC reclaims $29k.
Dipping Open Interest hinted at demoralized buyers
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Source: Coinalyze
AVAX’s extended price retracement saw an attendant decline in its Open Interest (OI). Data from Coinalyze showed that the OI has been on a steady decline since 20 July. This indicated liquidation by discouraged long traders which reinforced the bearish bias for AVAX.
Fluctuating funding rates in higher timeframes did little to help the bullish cause. This could serve as a cue for more bearish momentum in the long term.
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
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