AVAX at a Crossroads: Bearish Setup Emerges After Failed Recovery Rally

Step-by-Step Technical Analysis for Avalanche (AVAX)

1. Trend Identification (Daily and Intraday)

• Daily Trend: From the beginning of April 2025 to early May 2025, AVAX showed a steep uptrend, rallying from around $15–$16 to almost $26. However, a clear correction followed. Post-peak, prices have fallen toward $18 (early June low) before rebounding to the present $20.82. The recent days suggest a corrective bounce off support, yet the broader trend is still showing lower highs and lower lows.
• Intraday Trend (Last 24h): Hourly candles show a moderate upward trajectory from $19.70 up to $21.10, but the latest candles indicate rejection above $21 and a slight retracement to $20.82, implying supply pressure above $21.

2. Key Support and Resistance Levels

• Support:
  • Strong support: $19.50–$19.70 (last swing lows, tested multiple times)
  • Secondary support: $20.13–$20.30 (intraday pivots)
• Resistance:
  • Primary: $21.10–$21.25 (recent hourly highs, rejected at $21.11 today)
  • Major): $22 (failed daily retest on May 31 & June 1–3)

3. Volume and Momentum Analysis

• Recent Volume: On June 5, there was very high volume during the sell-off (drop to $18.79), indicating panic selling or forced liquidation, then a fast snapback to $20+, but with less volume on the recovery (June 6–7). This suggests the rebound may be driven by shorts covering, and not aggressive new buying.
• Momentum: RSI (estimation by price action/volatility) seems neutral—neither extremely oversold nor overbought. However, the bounce from $18.79 to ~$21 was strong but lacks continued high buying volume.

4. Candlestick Patterns and Price Action

• Daily candles: June 5–7 candles exhibit strong lower wicks (buyers stepping in), but June 7 shows an upper wick and rejection above $21, implying nearby sellers remain active. The last completed candle is indecisive/doji-like.
• Intraday candles: Successive higher lows overnight, but the latest hours show stalling momentum just below $21.00–$21.10 level.

5. Moving Averages (EMAs/SMA, visual estimate)

• 20-Period EMA (Estimate, Daily): Likely sloping downward and near $21–$21.5, currently acting as resistance.
• 50-Period SMA (Estimate, Daily): Likely above $22 and well out of reach for now.

6. Fibonacci Retracement (March–May Rally)

• The rally from $15.99 (April low) to $25.88 (May high) gives a 50% Fib support of roughly $20.93, which is precisely near current trading. The 61.8% level is around $19.90, aligning with prior support zones.
• This suggests current levels are a key inflection zone; a close below $20.90 risks further downside to $19.80.

7. Pattern Recognition & Psychological Round Numbers

• No clean ascending/descending triangle, but possible bear flag: Short-term rally (June 5–7) after a steep sell-off (June 2–5) appears as a flagpole with a modest upward channel—often a bearish continuation pattern.
• Psychological levels: $20, $21—thresholds where liquidity and stops often cluster. Price has not closed strongly above $21 this session, showing lack of bullish strength.

8. Order Flow Analysis (Estimating from Candle Structure)

• The upper candle wicks and declining volume in the last six hours suggest larger sellers are using rallies to exit, rather than new buyers controlling the tape.

9. Relative Performance to Prior Swings

• Post-May rally, every consecutive bounce has been shorter and less forceful. This points toward seller dominance and distribution rather than accumulation.

10. Volatility Assessment & Risk Management

• ATR (Average True Range, estimation): Daily moves in prior correction range from $1.40–$2.20. That means a 5–7% move is statistically normal in 24h for AVAX at this volatility regime.

Combined Interpretation & Cross-Indicator Consensus

• The chart shows some short-term bounce potential, but overhead resistance around $21–$21.2 is significant. Supply at these levels, combined with failed breakouts and previous support now acting as resistance, weighs against a sustained upward move.
• Volume profile and candle structure point toward rallies being used for distribution (selling), not accumulation. The bear flag and decreased bounce strength reinforce a likely breakdown once this corrective move completes.
• The current price is right at a critical pivot ($20.82–$20.90); failure to claim and defend $21 suggests the next swing will likely target $19.7–$20.0, potentially even lower if stops are triggered.

Conclusion: High-probability Short (Sell), Target $19.70

Given the exhaustion of the bounce, presence of supply overhead, and statistical mean reversion tendencies, initiating a short position near $20.85–$21.00 is optimal. The stop should be above $21.25 (recent highs plus a volatility buffer), with a profit target at the strong support zone of $19.70, which also aligns with probabilistic downside and recent liquidity pools.

(Optional: If you are a scalp trader, $20.50 could be a partial target, but $19.70 offers better reward/risk for a 24-hour horizon.)

No investment advice. For informational purposes only.