- AVAX price dropped on May 29 following the Avalanche token unlock.
- The DeFi token has formed a bullish technical pattern.
NEW DELHI (CoinChapter.com) — DeFi platform Avalanche’s recent token unlock ended a three-day AVAX price rally on May 29.
The unlock injected 9.3 million AVAX tokens into the circulating supply. Recipients of the unlocked tokens include the Avalanche Foundation, strategic partners, Ava Labs, and an airdrop.
Avalanche’s recent unlock event means 51.6% of the total AVAX supply has been unlocked, while 348 million tokens remain locked. Per data from Token Unlocks, the next unlock event for the DeFi token will happen in August 2023.
Traditionally, traders consider token unlocks a bearish event as the circulating supply spikes and the profit booking increases selling pressure. However, since the Foundation is one of the unlock recipients, it likely wouldn’t immediately start selling.
AVAX’s downtrend halted the token’s rally that began after the launch of Avalanche’s Web3 launchpad, AvaCloud. The platform would help users deploy and scale custom blockchains without coding knowledge.
Avalanche claims AvaCloud would help businesses cut down their time-to-market and overhead costs. Moreover, the platform includes an automated blockchain builder, validators, data tools, and chain interoperability features.
AVAX Price Forms Bullish Wedge Pattern
Meanwhile, AVAX’s price moves inside a bullish falling wedge pattern.
The technical pattern forms when the price fluctuates inside a pair of falling trendlines that would converge down the slope. The outcome of such downside patterns is typically a price breakout to the upside.
One key feature of the pattern is that volumes usually decline as the trendlines converge.
The upside target for the breakout is equal to the maximum distance between the falling wedge’s upper and lower trendlines. Thus, confirming the pattern could see the Avalanche token rally nearly 220% to reach a calculated price target of $47.
AVAX bulls entered the market following the launch of the AvaCloud on May 24. The buying pressure resulted in Avalanche price rebounding from support near $13.8 and rallying 9.1% to form a daily high near $15 on May 28.
However, AVAX’s price dropped 2% to a low of $14.7 on May 29. Continued sell-off might result in the Avalanche token price falling to its support level near $14.5. Breaching the immediate support could see the AVAX price retest the $13.8 support level.
Conversely, an uptrend from here would likely see AVAX price struggling with the 20-day EMA (red wave) resistance near $15.2. A break and hold above immediate resistance might help the Avalanche token rally to $16 before paring gains.
The relative strength index for AVAX remained neutral, clocking at 42.6 on the daily chart.