Avalanche (AVAX) Price Could Rally Another 50% in 2023 on Favorable Risk-On Sentiments

Key Takeaways:

  • Avalanche (AVAX) price started correcting after reaching its best levels in two months.
  • On the daily chart, AVAX is witnessing a bearish divergence between its price and momentum.
  • But long-term, Avalanche looks skewed toward bulls.
Avalanche (AVAX) Price Could Rally Another 50% in 2023 on Favorable Risk-On Sentiments
Avalanche (AVAX) Price Could Rally Another 50% in 2023 on Favorable Risk-On Sentiments.

NEW DELHI (CoinChapter.com) — An ongoing uptrend in the Avalanche (AVAX) market appears to be hitting exhaustion in the short term. However, the token’s long-term prospects remain skewed to the upside. Let’s dive.

Avalanche (AVAX) Price Detects Bearish Divergence

AVAX’s price closed at around $17 on Jan 24 after a circa 5.5% intraday decline. Earlier on the same day, the token had reached $19, its highest price level since November 2022.

In other words, most traders decided to secure their profits at the two-month high than build new long positions.

At least one technical indicator explains why. In detail, the AVAX price and its daily relative strength index (RSI), a technical indicator that measures an asset’s oversold and overbought levels, have been diverging from each other since mid-January.

The AVAX price has been forming higher highs while the RSI, now in its overbought region, has been making lower highs, which technically means a bearish divergence. In a perfect scenario, a bearish divergence hints at bulls losing the market’s control, leading to a price correction period.

Avalanche (AVAX) price daily chart. Source: TradingView
AVAX/USD daily price chart. Source: TradingView

Simultaneously, AVAX shows a weakness in its upside bias by testing $19.70 as its interim resistance level. Sellers have previously become active around the same level, which raises anticipations that AVAX will start correcting by late January or early February.

Suppose a correction occurs. Then, the AVAX price’s next downside target is around $15, another historical support level. Such a move would also enable the Avalanche’s daily RSI to neutralize its overbought readings.

Long-Term Bullish Sentiment Intact

On a longer-timeframe chart, AVAX’s correction prospects are a blip against its massive upside potential.

Notably, the $15-19 range appears to be AVAX’s last leg before it pursues its broader bullish target inside the $27-30 price area.

Avalanche (AVAX) weekly price chart. Source: TradingView
AVAX/USD weekly price chart. Source: TradingView

That looks possible mainly due to favorable risk-on indicators, including the Federal Reserve’s likelihood to ease its interest rate hiking spree at the end of their two-day meeting on Jan 31 and Feb 1. In addition, Avalanche’s partnership with Amazon has created the right buzz for its layer-one blockchain solutions, which may also help AVAX price rally in the long term.

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