AVAX Surges 22% in Trading Volume, Eyes 21% Gain if $21 Level Holds

AVAX, the native token of the Avalanche blockchain, has the potential to surge by 21% and reach the $25.15 level, but this bullish outlook is contingent on a critical condition. The altcoin's price must close a daily candle above the $21 mark to validate this bullish thesis. Failure to do so could result in the rally fizzling out.

Following a significant price decline of over 70%, AVAX is now positioned for a potential upside rally. This optimism is fueled by the current price action and the growing interest from traders and investors in the asset. On-chain analytics firm revealed that participation from whales and investors in AVAX has surged, leading to a 169% increase in large transaction volume. This spike in trading volume coincides with AVAX breaking out from a bullish price action pattern, indicating a positive sign for the asset's future performance.

At the time of reporting, AVAX was trading near $20.05, reflecting a 2.50% price decline over the past 24 hours. Despite this slight dip, the overall trading volume jumped by 22%, signaling heightened participation from traders and investors. This surge in trading volume suggests strong interest from traders, and if it follows a breakout, it could indicate a bullish opportunity.

Technical analysis supports the bullish outlook for AVAX. On the weekly time frame, AVAX appears to be hovering within a descending channel pattern, having successfully retested the lower boundary by forming a strong bullish engulfing candlestick pattern. On the daily time frame, AVAX has broken out of a descending channel pattern and is on the verge of breaking out of a bullish cup and handle pattern. The recent breakout above a strong bearish hurdle, along with the potential cup and handle formation, signals a massive upside potential.

The daily chart further reveals that AVAX is trading near the neckline of a bullish pattern, which appears to be a make-or-break point for the asset. Based on recent price action, if the price breaks out and closes a daily candle above the $21 level, there is a strong possibility it could initially rally by 21% to reach the $25.15 level. If the upside momentum continues, it could further propel the asset by another 25%, reaching the $31.40 level in the coming days.

However, the technical indicators present a mixed sentiment. At the time of reporting, AVAX was trading below the 200 Exponential Moving Average (EMA), indicating that the asset is in a downtrend with weak momentum. Despite this, its Relative Strength Index (RSI) was near 56, suggesting that AVAX has sufficient room for an upside rally. Having crossed the neutral zone, the RSI signals that the asset could gain further bullish momentum. Nevertheless, AVAX’s bullish thesis will only remain valid if the asset closes a daily candle above the $21 level; otherwise, the rally may fail.