Denial of responsibility: The findings of the following analysis are the sole views of the author and should not be considered investment advice.
The previous trading day saw heavy losses across the board for both stocks and cryptocurrencies. Bitcoin [BTC] fell 12% and the S&P 500 also fell 4.3%.
This was due to fears that the Federal Reserve would likely raise interest rates in an attempt to combat rising inflation.
Avalanche [AVAX] it has not been able to scale the highs of $21.86 in recent days. Going forward, it looked likely that there could be further downside in the next week or two.
AVAX- 1 Hour Chart
Avalanche has faced significant selling pressure in recent hours. The $20.5 area, which was a consolidation zone a few days ago, did not give any noticeable reaction on the hourly chart. AVAX crashed right through it and had to sink to the $18.72 level to find a positive reaction.
At the time of writing, the bounce from the $18.72 mark was underway. However, it was likely to face resistance to $19.4-$19.5 zone. Earlier in September the $19.5 zone had acted as resistance and was highlighted as an important near-term area.
The blue box marked on the chart highlighted a bearish order block from late August. Due to the drop to $18.7, it was likely that the $19.5 area would be seen as a supply zone. Therefore, traders can search sales opportunities short term.
Short-term momentum was strongly bearish. The Relative Strength Index (RSI) fell to 25 and bounced back slightly to reach 35 at press time. Until the RSI can climb above the neutral 50, the short-term momentum would be bearish according to the RSI.
Stochastic RSI approached overbought territory and could soon form a bearish crossover. While the Stochastic RSI alone has a low hit rate, the confluence of the bearish RSI and the $19.5 resistance meant that AVAX could see further losses soon.
The Accumulation/Distribution (A/D) line was near its September low and highlighted the high selling volume in recent hours.
Heavy selling meant that buying AVAX could be risky in the coming days. Rather, an AVAX sale close to Resistance $19.5-$19.6 they would trade with the trend.
However, the Avalanche has bounced between $17.9 and $21.8 in recent weeks. A further drop to $17.9 could see a strong bounce.