Avalanche (AVAX) saw a positive 3.75% price increase over the past 24 hours, bringing the current trading price to $10.45. The native token of the layer 1 blockchain network has a market capitalization of $3.71 billion. Trading volume was $87.83 million for the 24-hour period.
In the short term view, AVAX has declined 0.76% in the past hour but remains up 3.75% for the day. Over the past week, the token has also trended upwards, gaining 2.12%. However, zooming out to the monthly timeframe shows continued challenges, with AVAX dropping 21.22% over the last 30 days. The 6-month decline has been even more severe at 38.89% lower than 6 months ago.
What key insights can traders take away from this mix of short-term positivity and long-term negativity in Avalanche's price action?
Short-Term Momentum Shifting in Bulls' Favor
The solid 3.75% daily rise combined with the 2.12% weekly gain show upside momentum is building in the near-term. AVAX appears to be establishing a short-term bottom and base from which prices can climb higher. If the momentum sustains, AVAX could make a run toward resistance around $15.
Potential for Near-Term Trend Change
With the developing upward momentum, AVAX may be in the early stages of a short-term trend change. The price needs to break through overhead resistance for confirmation, but the bullish momentum is an encouraging sign. Traders should watch for increased trading volume for a stronger signal of emerging strength.
Key Longer-Term Resistance Still Intact
Despite renewed near-term strength, AVAX still faces significant technical resistance on the higher timeframes. The monthly and 6-month downtrends remain firmly intact. For the bulls to retake full control, AVAX will need to break above resistance around the $20-$25 zone from its previous price range.
Use Oversold Bounce to Accumulate Exposure
With AVAX bouncing off oversold levels, long-term investors can use the opportunity to start scaling into a position. Cost averaging over time rather than buying all at once allows strategically building exposure at a discount. Patience remains key.
Active Traders Can Benefit From Short-Term Swings
For short-term traders, the budding near-term uptrend allows punching long on pullbacks while using tight stop losses. If momentum stalls, traders should exit quickly rather than trying to predict tops and bottoms. The ability to enter and exit with precision is key.
Tread Carefully With Leveraged Longs
Though upside momentum is improving short-term, the major downtrend cautions against highly leveraged long positions at current levels. Consider options strategies to define and limit risk rather than excessive leverage. Use leverage judiciously until longer-term resistance gives way.
Is Avalanche Poised for a Trend Reversal?
With renewed upside momentum, the question becomes whether Avalanche is poised for a sustainable trend reversal. The bullish momentum signals a potential change, but the technical damage from the extended downtrend raises doubts. Traders should wait for AVAX to reclaim key levels before confidently calling a major trend change. Patience and discipline remain prudent.
Should Long-Term Investors Buy Avalanche Here?
For long-term AVAX investors, its substantial price decline raises the question of whether current levels are attractive for accumulating a position. Dollar cost averaging can improve entry price, but further downside is still possible. While signs point to a potential bottom, it remains unwise to assume the exact low is in place. Long-term investors should average in using a disciplined approach.
In summary, Avalanche is showing signals of bottoming and upward momentum in the near-term. However, the technical headwinds from its long-term downtrend persist. A measured approach that employs prudent risk management remains appropriate until more definitive confirmation of a trend reversal emerges. Traders can capitalize on short-term swings, but caution is still warranted for those with a longer time horizon at current levels.
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