Avalanche [AVAX] Has Retraced All the Gains It Made Since November

Avalanche [AVAX] has retraced all the gains it made since November. At press time, it seemed to have a strong demand zone just below $20, but it was unclear if this zone could reverse the strong downtrend behind AVAX.

Avalanche [AVAX] has seen a significant pullback from the gains it made in November. At press time, it appeared to be forming a strong demand zone just below $20, but it was unclear if this zone could help to stem the strong downtrend behind AVAX.

On the daily chart, the altcoin has been trending downwards since late January, when the asset encountered a lower low below the $35 support. Its momentum, indicated by the MACD, remained firmly bearish throughout February, even as a bullish divergence began to emerge as AVAX approached the $20-support.

AVAX faced resistance at the 20-day moving average and the 100% retracement level.

Source: AVAX/USDT on TradingView

The market structure and trend have been bearish in February. The 100% retracement level that marked the November lows at $22.35 has been flipped to resistance. The next support level is now at $19.73 – A significant support level from November 2023.

Interestingly, as AVAX approached the $20-psychological level, it formed a divergence with the momentum indicator. The price made lower lows while the MACD indicator made higher lows. This divergence, which began on February 1, suggested that a price bounce may be likely in the coming days.

However, this bounce would not be enough to immediately reverse the downtrend. A shift in market structure would occur when the AVAX token sets higher swing highs and lows.

The immediate resistance for AVAX to breach would be $26.54, just above the 20 DMA at $24.24. As things stand, however, such a move does not seem imminent.

Liquidation data from Coinglass highlighted that the $27.4-level was a strong magnetic zone for price action in February.

Below it, the lower timeframe local highs at $23.4 from February 15 and 16 meant that the $23.7-$24 region was also a short-term target for liquidation in the coming days.

To the south, the $20-zone also had a cluster of liquidation levels. Considering the bullish divergence and Bitcoin’s [BTC] bounce above $85k, there’s a chance that AVAX would move towards $24 next. Traders must be careful as a BTC drop could take the price to $19.7-$20.