Disclaimer: The information presented does not constitute financial, investment, trading or any other type of advice and solely represents the opinion of the author
- Axie Infinity suffered from strong selling pressure
- A move below $6.6 and $6 can present opportunities for bears
Axie Infinity dipped below $7.7 again in mid-December after bulls struggled to clear this level throughout November. Given the sentiment across the crypto market, a strong uptrend may not be seen for a few months.
Therefore, given how AXS has been trending since September, long-term investors may be wondering whether to DCA or wait for further downside.
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The market structure on the 12 hour time frame was bearish. To change this, AXS needs to close a trading session above $8.23. Still, $8.8 would tower over the buyers. Do they have the power to push prices above $8.8 in the coming weeks?
An attempt to reclaim $8.8 exhausted the bulls and the sellers have dominated ever since
Source: AXS/USDT on TradingView
The orange trend line connected the series of lower highs AXS has been making on the price charts since September 3rd. The trend had been bearish before and $19 turned to resistance in August.
On December 5th, Axie Infinity tokens saw a big surge from $6.87 to $10.4. This indicated that a sentiment reversal towards a bullish bias may have occurred. However, trading on the day closed at $8.79, just below the significant resistance at $8.8. Subsequent attempts to flip $8.8 for support failed.
The Relative Strength Index (RSI) fell below the neutral 50 level for the 12-hour period on December 12, suggesting that the momentum is in favor of the bears. At press time, it stood at 45 to signal weak bearish momentum. Chaikin Money Flow (CMF) has risen over the past ten days to indicate strong capital inflow into the market, but AXS has yet to respond positively.
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Support for a higher timeframe was $6 and $6.6 was important for lower timeframes. A move below $6.6 and then retest can be used to enter short positions targeting $6. Under $6, $4. and $3.42 could serve as support levels.
Open interest is falling in tandem with price to signal bearish sentiment
Source: Coinalyze
In early December, Axie Infinity caught a wave of euphoria and surged to $10.4. Aggregate open interest surged and short positions were liquidated in large numbers due to the violent movement.
Since then, the price has continued to follow the downtrend of the higher timeframe. On lower time frames like the four-hour period, momentum was also down. The drop in open interest coupled with falling prices meant long positions were discouraged and sentiment in the futures markets remained bearish.
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