AVAX moves to $9 as selling pressure grows; can bulls alter the scenario?

Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.

• AVAX neared a higher timeframe support zone
• The dwindling demand in recent days suggested a bullish reversal, while possible, could be a risky trade idea

Avalanche [AVAX] did not have a bullish bias in the price charts. It has been on a downtrend since May on the higher timeframe charts such as one-day. The shorter-term chart such as four-hour showed a bearish structure for the token as well.

Read Avalanche’s [AVAX] Price Prediction 2023-24

A recent AMBCrypto price analysis of Avalanche highlighted that a drop below $9.5 would reflect intense bearish sentiment in the market. It underlined the $9.3 and $9 as interim support levels. At press time $9 was threatened by selling pressure.

Monday’s bounce saw $9.3 flipped to support, but only briefly

Source: AVAX/USDT on TradingView

The four-hour chart above showed a bearish market structure after AVAX fell below the $9.07 higher low from 15 October. The Relative Strength Index (RSI) also dived below neutral 50 to showcase bearish momentum had the upper hand.

The $8.730$9.05 zone was a bullish order block (cyan box) from the one-day timeframe. In the past few weeks, Avalanche bulls have succeeded in defending this zone. It was unclear how much longer they could keep the bears at bay. A successful defense and bounce could see the Avalanche advance as high as the $9.8 mark, close to Monday’s (16 October) high.

The On-Balance Volume (OBV) saw a severe drop over the past two weeks and reflected extremely high selling volume. This was in stark contrast to what it did throughout September when it stayed relatively flat while AVAX oscillated from $8.8-$9.4.

The growth in short positions implied a bullish reversal could be accomplished

Source: Hyblock

The evidence so far from both the indicators and the price action of Avalanche showed that the sellers had a significant advantage. Yet, data from Hyblock showed that we could see a move higher in search of liquidity.

The Cumulative Liquidation Levels Delta showed a lot more short positions were at risk now than longs. While significant liquidation marks sat in the $8.8-$9 region, a move higher could be easier to pull off.

Realistic or not, here’s AVAX’s market cap in BTC’s terms

In particular, the $9.24 and $9.34 levels were places that could trigger $5 million worth of short liquidations combined. These forcibly closed positions could propel AVAX higher, and the $9.8 level could be tested.