Avalanche Plunges: Bulls Defend Support at $46.5, Bears Eye $33

Avalanche [AVAX] prices plunged amid a market sell-off and breached a crucial demand zone at $46.5, raising concerns for investors. Bulls may anticipate a decline towards $33, supported by liquidity concentrations and technical indicators indicating weak momentum and capital outflow. However, potential support levels at $42.6 and $38.6 exist, providing opportunities for a retracement before a potential drop to $33.

Avalanche Plunges: Bears Target $33, but Bulls Defend Breaker Block

In a tumultuous crypto market, Avalanche [AVAX] has embarked on a downward trajectory, echoing the bearish sentiment that has gripped Bitcoin [BTC] and its peers. However, technical analysis reveals that bulls are determined to hold their ground and prevent a catastrophic dive towards $33.

Breaker Block Holds, but Bears Test Resolve

A technical analysis by AMBCrypto identified two pivotal demand zones, dubbed "breaker blocks," represented in cyan on a 1-day price chart. These zones represent historical levels where AVAX has found support. The first breaker block, located at $46.5, coincided with the 61.8% Fibonacci retracement level.

Initially, traders anticipated a bullish response at this level, but prices briefly dipped below $46.5 on April 3rd. Notably, AVAX has not yet closed a 1-day or 12-hour candle beneath this critical support, indicating that bulls are actively defending this area.

A second demand zone, located at $41.37, also holds strategic importance as a confluence of breaker block and Fibonacci retracement level. This level represents a further buffer against bearish pressure.

Technical Indicators Signal Bearish Momentum

While bulls fight to maintain support, technical indicators paint a somber picture. The Relative Strength Index (RSI) has plunged to 35, indicating substantial bearish momentum. The Chaikin Money Flow (CMF), currently at -0.18, suggests a significant outflow of capital from the AVAX market.

Liquidation Cascade Threat Lurks

A liquidation heatmap analysis reveals a crucial area of liquidity between $50 and $51. When AVAX prices plummeted below this level in the past three months, it triggered a liquidation cascade, pushing prices further downwards.

At the time of writing, $42.6 and $38.6 were identified as potential targets for future liquidations. A large concentration of liquidations is also present at $33-$33.3. Should AVAX fall to these levels, it could signal a bearish shift in market sentiment.

Bulls Hold the Line, but Cautious Approach Warranted

Despite the bearish indicators, bulls have exhibited resilience in defending the current breaker block at $46.5. However, the threat of a liquidation cascade looms large, and investors should exercise caution. If AVAX breaches the $41.37 support level, it could trigger a sharp decline towards $33.

Traders and investors should closely monitor price action and technical indicators to navigate the current market turbulence. While narratives can drive market sentiment, technical analysis provides valuable insights into potential price movements and areas of support and resistance.