Fibonacci Analysis Indicates Potential 4x Rally for Avalanche (AVAX) Price After This Breakout
Technical analysis from crypto analyst Alex Clay suggests Avalanche (AVAX) could be on the verge of a price surge, based on a bullish chart pattern formation.
On the two-week timeframe, AVAX has formed a Cup and Handle pattern, a formation that typically precedes substantial upward price movements. This pattern shows a rounded bottom (the cup) followed by a brief consolidation period (the handle), setting up what could be a powerful breakout scenario.
The current price action faces a crucial resistance cluster. This includes a descending trendline that has capped previous rally attempts, combined with a key horizontal resistance zone that coincides with the Cup and Handle pattern’s neckline. Breaking through this confluence of resistance levels could trigger a significant rally.
Using Fibonacci extension analysis, Clay has identified three potential targets following a successful breakout. The first major target sits at $108.8 (1.618 Fibonacci level), followed by $165.5 (2.618 level), and an ambitious target of $221.5 (3.618 level), which is an over 4x increase from the current level around $42.
The current market structure shows strong support in the $40 range, which aligns with previous consolidation areas and forms the base of the handle formation. This support zone could provide a solid foundation for the anticipated upward movement.
Trading Implications
A decisive break above the resistance confluence would validate the Cup and Handle pattern and potentially trigger a rally toward the projected targets.
However, if the price fails to breach this resistance, we might see a retest of lower levels within the handle formation or possibly a drop to the $40 support zone before another attempted breakout.
Read Also: Here’s Why Movement (MOVE) Price Could See a 50% Jump Soon—Analysts
The presence of increasing trading volume near the resistance zone adds credibility to the potential breakout scenario, suggesting growing buyer interest at these levels. This volume behavior is crucial for confirming the validity of any breakthrough.
The technical setup appears compelling, but as with all trading opportunities, proper risk management and confirmation of the breakout remain essential before taking any position.
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