Disclaimer: The information presented does not constitute financial, investment, trading or any other type of advice and solely represents the opinion of the author
- AVAX MFI has been in an overbought zone and is ripe for a potential reversal
- However, a break above $12.10 would invalidate the bearish forecast
avalanche [AVAX] The 2023 rally gained over 14% after rising from $10.71 to $12.30. It then cooled and the price correction settled at $11.45.
At press time, AVAX was in another uptrend but faced a challenge after Bitcoin [BTC] failed to clear the $17,000 resistance. AVAX traded at $11.77 and could drop lower to retest $11.45 support if BTC price correction continues.
read avalanche [AVAX] price prediction 2023-24
The $12.10 Target: Can the Bulls Target It?
Source: AVAX/USDT on TradingView
AVAX fell below its late December trading range of $11.59 – $11.85 but found solid support at $10.71. The transition into the new year formed a false bottom that set the course for a price recovery.
However, AVAX encountered a bearish order block at $12.10, forcing it to correct in price, held in check by the $11.45 support.
The price rally at press time may prove difficult as the Money Flow Index (MFI) had entered overbought territory. This suggests that accumulation has peaked and distribution may be underway, which could trigger a price reversal.
The Relative Strength Index (RSI) was rejected in the middle but moved slightly up and sideways. On-balance volume (OBV) also fell slightly. This indicated that buying pressure was gradually increasing after a steep decline, but it wasn’t enough to push the bulls to target the $12.10 level.
Therefore, AVAX could drop back to $11.59 or $11.45. Short sellers can sell high and buy back cheaper at these levels.
However, a break above the bearish order block at $12.10 would invalidate the forecast. Such a move could allow AVAX bulls to target $12.46, especially if BTC is bullish.
AVAX’s OI fell, but the outlook and futures market demand remained flat
Source: coin jar
According to Coinglass, AVAX open interest increased from mid-December and appeared to have peaked at press time. This indicated that AVAX was seeing increased cash inflow into the options and futures markets.
However, the drop in AVAX’s OI at press time suggests more money is exiting the futures market.
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Nonetheless, AVAX sentiment remained upbeat and demand in the derivatives market remained flat, as evidenced by the positive and flat Binance Funding rate for the AVAX/USDT pair.
Source: Santiment
This means that AVAX could potentially rally if BTC attempts a recovery. Therefore, investors should monitor BTC before taking any action.
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