Avalanche 'bull trap' risks pushing AVAX price down by 30% in February
Avalanche (AVAX) bulls should brace themselves for impact led by a growing divergence between severalkey indicators on the daily-timeframe chart.
The daily AVAX chart shows a classic bearish divergence between its price and relative strength index (RSI), a momentum oscillator forming since Jan. 11.
In other words, the price of AVAX has been making higher highs since the said date. But, on the other hand, the coin's daily RSI has been forming lower highs. This divergence suggest a slowdown in the momentum of the AVAX/USD pair, which may lead to a price reversal.
In addition, the declining volumes during the course of AVAX's ongoing uptrend also hints at the same bearish cues.
The price-RSI and price-volume divergences appear as AVAX price continues its 2023 uptrend . Notably, Avalanche has rallied by more than 100% year-to-date to $22.50 as of Feb. 2, helped by improving risk-on sentiments and news of its partnership with Amazon.
On Jan. 31, Avalanche partnered with Intain, a structured finance platform that facilitates more than $5.5B in assets across more than 25 deals to run its digital marketplace IntainMARKETS via IntainMARKETS Subnet.
The price of AVAX rallied nearly 20% after the announcement.
AVAX's price has successfully closed above two key resistance levels: a multi-month descending trendline (blacked) and its 200-day exponential moving average (200-day EMA; the blue wave) during the ongoing rally.
Avalanche now eyes a breakout above $22.75, which has been serving as resistance since August 2022, for a potential breakout to $30 as its next upside target. This level also coincides with the falling wedge breakout target discussed in this analysis.
In other words, an approximately 30% gain from the current price
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