A down-channel breakout has put Avalanche on track towards its 22 December swing high of $128. A potential throwback to the 20-SMA would present an ideal buy opportunity, allowing investors to grab an 18% profit from the projected run-up. At the time of writing, AVAX traded at $115.3, up by 4% over the last 24 hours.
Avalanche 4-hour time frame
Avalanche was amidst an important rally after breaking north of a down-channel on the 4-hour time frame. The move was also significant on the daily timeframe, which highlighted a bull flag breakout (not shown). Before advancing any further, it’s important to note that AVAX traded at the 61.8% Fibonacci level of its move from $100 to $128 in late December 2021. Since AVAX was also overbought on the Bollinger Bands, a throwback to the 20-SMA was expected over the coming sessions.
A throwback is a temporary retracement that occurs following a breakout and presents a second entry opportunity. Once buyers reapply pressure at the 20-SMA close to $110, AVAX would be in a prime position to revisit the $128-mark. A similar outcome can be expected if AVAX’s current rally extends above the $120-mark.
To negate such predictions, sellers needed to target a close below the 23.6% Fibonacci level. Support at $98 would then become pivotal for recovery.
Favorable predictions were backed by a bullish RSI and Awesome Oscillator. The RSI had more room for growth until the overbought territory is breached. However, the index did note a slight downtick as AVAX challenged the 61.8% Fibonacci level.
Similarly, MACD’s recovery above the half-line was encouraging but the histogram indicated that upwards momentum was slightly declining over the past two sessions.
AVAX could decline to its 20-SMA (red) considering overbought readings on the Bollinger Bands. However, a throwback would allow investors to get in on the action. If timed correctly, a throwback to $110 can allow investors to bag an 18% profit from their investments.
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