- Ethereum-based breeding game Axie Infinity’s governance token AXS looks overbought
- Fervent buying pressure catalyzing the crypto asset’s technical defying rally
- RSI and MACD indicators look wobbly and indicate a steep course correction
JAIPUR (Coinchapter.com) – Axie Infinity’s AXS blockchain asset is in a different zone than the rest of the cryptocurrency market. The majority of crypto assets are reeling under bearish pressure. But, AXS, with a near 800% pump (from $3.2 to $26), has set the course straight for the moon.
AXS underpins Axie Infinity’s “battle, collect, earn” virtual economy. The asset has recently experienced record-buying volumes by players looking to generate income from breeding, battling, and trading digital pets. But the scenario in April was different. After achieving a local top at $11 during the crypto market rally, AXS descended into bearish depths, dropping to $2.75 during May and June.
But after the liftoff from the $3.2 price level, there was no looking back. However, signs of exhaustion have started showing up.
AXS Bearish Divergence And Technical Setups
Bears tried interrupting AXS’ explosive rally on several occasions, but buyers and adopters kept showing up nonetheless. But frequent selloff attempts have put cracks in the asset’s strength. After peaking at 83, AXS’s relative strength index (RSI) is on a decline since the beginning of this month.
The technical setup on RSI shows multiple descending peaks, which is a classic bearish sign. However, contrary to this, the AXSUSDT pair is in a strong uptrend. The same shows up from the multiple higher highs printed on the daily chart since July 3.
The bearish divergence between RSI and AXS price hints at a correction ahead. A near-term correction is also indicated by multiple bear flag pattern formations rigging the AXSUSDT trajectory. Buyers absorbed all pullbacks to date in a desperate move to push prices higher. But a deeper pullback will be challenging to offset as AXS’s RSI is following a diminishing trend.
In the case of a correction from current prices, the 4-hour AXSUSDT chart shows spot rates falling to $20.22 (50% Fibonacci retracement level) and $18.11 (38.2% Fibonacci retracement level). A deeper correction could drag prices 55% down to $11.4 levels.
But a drastic correction could materialize only with a much higher upside move from the current spot rates. In the stated case, bulls pushing AXS prices to $40.29 (161.8% Fibonacci retracement level) would lead to bears engaging in a massive drawdown. The correction, then, could be anywhere north of 70%.