Key Takeaways

• A potential 20/200 EMA bullish crossover may signal strong momentum for Avalanche (AVAX). Investors and traders should watch a potential crossover closely for market entry and exit points.
• With increased development activity and new partnerships, the AVAX ecosystem looks healthy.

Technical Analysis: Avalanche Price Surged By Over 45% After A Patterned Breakout

AVAX price had been moving sideways for two months, staying below the $14.3 resistance level. It wasn't until the bulls stepped in that this resistance was flipped to support.

During this period, the 20 Exponential Moving Average (EMA) had a bullish crossover with the 50 EMA. A bullish crossover occurs when a short-term moving average crosses above a long-term moving average, suggesting upward price momentum. This type of crossover can be a powerful indicator for traders looking for entry points in a potential uptrend. Now, traders should watch for a potential bullish crossover of the 20 EMA and the 200 EMA, which often signals long-term bullish tendencies.

Also, Avalanche recently saw a classic falling wedge pattern, a bullish reversal pattern characterized by a narrowing price range and declining trading volume. This pattern's breakout helped bulls retest the $21 resistance before reversing from that level. The falling wedge pattern is often seen as a reliable indicator of an impending bullish trend, making it an essential technical analysis tool for investors.

The price is now above the 200 EMA, a level it struggled to maintain in previous attempts. If the price stays above the 200 EMA, it could signal strong bullish momentum, so keep an eye on it. The price is currently near the EMAs, which indicates a low volatility phase for some time. This could also mean a high volatility move is due according to the market's cyclical tendencies.

The low volatility phase represents a period of consolidation, and a breakout from this phase could lead to a significant price movement in either direction.

The Relative Strength Index (RSI) is a vital indicator for measuring an asset's overbought or oversold conditions. Recently, the RSI for AVAX was overbought and saw an expected reversal from the overbought region, causing a near-term setback before a likely revival. Monitoring the RSI can help traders identify potential reversals and entry points in bullish and bearish markets.

AVAX On-chain Analysis Overview

Since November 2021, there has been a consistent uptrend in development activity on the Avalanche network. Development activity is crucial for a network's growth, as it demonstrates the commitment of developers to improve the project and can positively impact the asset's price. A healthy development activity rate can attract more developers, users, and investors, leading to a thriving ecosystem.

From a long-term perspective, the price declined while development activity spiked, causing a bullish divergence. This divergence might suggest that the network's underlying fundamentals remained strong during the bear market.

Furthermore, Avalanche’s partnerships with companies like OpenSea, Shopify, and Alibaba over the last few months have set the stage for further ecosystem expansion. These collaborations can help Avalanche gain more adoption, increase its use cases, and drive price appreciation.

Total Value Locked in DeFi, the platform's TVL stood at $855.9 million, maintaining the 7th rank among all chains. However, in 2023, the TVL trend moved sideways without witnessing a significant spike. TVL is an essential metric for measuring the growth and adoption of a blockchain platform, especially for those focused on decentralized finance (DeFi).

Avalanche Price Prediction 2023

While the overbought RSI may cause near-term setbacks, a potential 20/200 EMA bullish crossover could trigger a long-term uptrend. The last time this bullish crossover happened on the AVAX daily chart was in August 2021.

If the price manages to close above the $21 resistance, the first major resistance for buyers stands in the $30.39 region. This resistance level could be a crucial price target for traders looking to capitalize on the potential uptrend.

During 2023, potential retracements could see a rebound from the $10 zone, as buyers have been defending this area for over two years. This long-standing support level indicates the resilience of the AVAX price and could provide an attractive entry point for investors seeking long-term exposure to the asset.

Should You Invest in AVAX?

Considering the increase in development activity, new upgrades, and partnerships, the AVAX ecosystem appears healthy. A broader market recovery could reignite bullish tendencies.

However, buyers should monitor Bitcoin's movement, as most altcoins correlate highly with BTC's price. In addition, it is essential to consider individual risk tolerance and investment goals before making investment decisions. The Okto DeFi Wallet App offers self-custodial storage for AVAX tokens and provides access to various DeFi investment options.

Catch top DeFi News & Updates on Okto Blog!