Axie Infinity: This new bullish divergence may trigger a near 75% upswing

Axie Infinity price approaches an oversold condition that hints at a reversal in trend favoring the bulls. This price action for AXS has also produced a bullish technical formation that adds further credence to the optimistic outlook.

Axie Infinity price ready for a quick run-up

Axie Infinity price rallied 62% between 24 January 24 and 7 February and created a range, extending from $44.27 to $72.10. These barriers served as a boundary that the bulls and bears have respected ever since.

The range-bound price action often sees a sweep of one of the limits followed by a run toward the opposite limit. For Axie Infinity price, the range low was swept first on 24 February, which was followed by a quick recovery and an 80% rally that deviated above the range high at $72.10 to set up a swing high at $75.45.

This massive upswing was followed by another corrective wave that has undone the gains since 24 February and swept lower than the previous swing low at $41.79. The current daily candlestick has set a makeshift swing low at $39.40, which could be overrun if the selling pressure increases. Assuming, this is where the price reveres, investors can be patient and wait for a recovery above the range low at $44.27 to enter a long position.

Interestingly, Axie Infinity price has set a lower low on 29 January and 26 April, while the Relative Strength Index (RSI) has created a higher high, indicating the formation of a bullish divergence.

This technical formation reveals that the momentum is rising while the asset’s price is producing a lower low. This divergence often produces an uptick in the market value of the underlying asset.

Therefore, a strong recovery above $44.27 will be a buy signal that could lead to a 40% upswing to the range’s midpoint at $58.18 or a 75% ascent to the range high at $72.10 from the current position at $41.29.

AXS Perpetual Futures | Source: Tradingview

The supply on exchanges on-chain metric, as the name describes, is used to determine the number of tokens held on centralized exchange. If the number of AXS tokens held on such platforms increases, it means that investors could be looking to book profits.

However, a decline in this number indicates that market participants are confident in the performance of Axie Infinity price and are likely to hold for a long term.

For Axie Infinity, however, this value has been on a downtrend since 27 October, 2021 and has dropped from 6.16 million to 2.1 million. This 4.06 million decline indicates that investors are growing extremely bullish on the performance of AXS.

Supply on Exchanges | Source: Santiment