Avalanche [AVAX] on the verge of breaking its current structure, should you short?
Well, the king coin still has some support extending to $21.2k, but a daily session close below $21.6k could start the next leg downward.If that happens, a large portion of the rally in January could see a retracement throughout February. Below $16.8, $15.8 and $14.2 are levels of support for AVAX. Whether the asset can bounce from $16.8 or fall lower is likely to depend on Bitcoin’s defense of the $21.6k area.
During this move upward, the RSI made lower highs while the price made higher highs. The bearish divergence played out in recent days and the price broke the market structure to bearish on lower timeframes. A daily timeframe flip would occur on a session close below $16.8. However, trading volume has been falling in the past few days alongside the drop in prices. This suggested that selling pressure was not immense, and hinted at chances of a recovery upward.While the RSI fell below neutral 50 to stand at 34, the OBV did not show such a sharp drop. Therefore the momentum was firmly bearish, but the volume sold wasn’t high enough to warrant the beginning of another downtrend.
It did not highlight a large number of short positions being opened, as OI would increase alongside falling prices to denote strong bearish sentiment in that case. The predicted funding rate also fell into negative territory a few hours ago. A continued slump in prices will see short positions encouraged. Long liquidations in recent hours also fed the selling pressure.Subscribe to get it daily in your inbox.
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