Avalanche (AVAX) recently shattered a significant resistance level, rising to highs of $23.
The retreat from the barrier that had previously capped its upward momentum might offer bears some hope.
But could bulls maintain the pressure and target the key hurdle of $40 next?
Avalanche’s recent price action follows a period of consolidation. While optimism remains, the AVAX token has dipped to near support with price around $21.
Notably, AVAX traded in a tight range between $18 and $20.50 after bouncing off lows of $14.5 seen earlier in the month.
The breakout to above $23 came amid Bitcoin’s spike to $94k, aligning with broader market performance. Upside momentum completed a significant recovery and formation of a potential cup and handle pattern.
Buyer action has been accompanied by a surge in trading volume, signaling strong upward interest.
Potential upside drivers of Avalanche price
Market sentiment is buoyed by Avalanche’s robust fundamentals and a return to the spotlight for decentralized finance (DeFi) and gaming tokens. The Avalanche ecosystem has benefitted from this, including recent partnerships.
Spot crypto exchange-traded fund applications and offering of other institution-focused AVAX products has bolstered the native Avalanche token. The US Securities and Exchange Commission has added to the excitement by acknowledging VanEck’s filing for a spot AVAX ETF.
These developments provide a strong backdrop for AVAX’s price gains, as the network’s utility and scalability remain competitive in the layer-1 blockchain space.
On-chain data provides further insight. Whale activity has increased, with large transactions spiking over the past week, suggesting accumulation by major holders. Meanwhile, the number of active addresses on the Avalanche network has risen by 15% in the last month.
A surge above $20 could see AVAX return to above $28 and target a nearly 100% spike to above $40.
Technical picture for AVAX price
Bulls have to offer sustained buying pressure to break past key levels.
Technical indicators are however bullish. The Relative Strength Index (RSI) is approaching 60, indicating growing momentum without entering overbought territory. Additionally, the Moving Average Convergence Divergence (MACD) has shown a bullish crossover, further supporting the case for continued upward movement.
However, challenges remain. The $23 and $28 levels, the latter coinciding with the 200-day moving average, could be a formidable resistance area.
Avalanche’s breakout above $23 marks a pivotal moment, with technicals and fundamentals aligning for a potential rally to $40.
While risks persist, the combination of strong network growth, bullish indicators, and increased on-chain activity positions AVAX for further gains, provided it can overcome the next resistance hurdle.
Weakness to $20 could see AVAX price revisit the recent lows of $14.
