Fibonacci Analysis Indicates Potential 4x Rally for Avalanche (AVAX) Price After This Breakout

Technical analysis from crypto analyst Alex Clay suggests Avalanche (AVAX) could be on the verge of a price surge, based on a bullish chart pattern formation.

Cryptocurrency technical analyst Alex Clay has shared his analysis on Avalanche (AVAX), suggesting that the coin could be poised for a potential 4x rally based on a bullish chart pattern formation.

According to Clay’s analysis, AVAX has formed a Cup and Handle pattern on the two-week time frame, which is a technical formation that typically precedes substantial upward price movements. This pattern showcases a rounded bottom (the cup) followed by a brief consolidation period (the handle), setting up what could be a powerful breakout scenario.

However, the current price action is encountering a crucial resistance cluster, which includes a descending trendline that has capped previous rally attempts, combined with a key horizontal resistance zone that coincides with the Cup and Handle pattern’s neckline. A breakout through this confluence of resistance levels could pave the way for a significant rally.

Using Fibonacci extension analysis, Clay has identified three potential targets following a successful breakout. The first major target is at $108.8 (1.618 Fibonacci level), followed by $165.5 (2.618 level), and an ambitious target of $221.5 (3.618 level), which would be an over 4x increase from the current price level around $42.

The current market structure also shows strong support in the $40 range, which aligns with previous consolidation areas and forms the base of the handle formation. This support zone could provide a solid foundation for the anticipated upward move.

Trading Implications: A decisive break above the resistance confluence would validate the Cup and Handle pattern and potentially trigger a rally toward the projected targets.

However, if the price fails to breach this resistance, we might see a retest of lower levels within the handle formation or possibly a drop to the $40 support zone before another attempted breakout.

It's important to note that the presence of increasing trading volume near the resistance zone adds further credibility to the potential breakout scenario, suggesting growing buyer interest at these levels. This volume behavior is crucial for confirming the validity of any breakthrough.

The technical setup appears compelling, but as with all trading opportunities, proper risk management and confirmation of the breakout are essential before taking any positions.

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