avalanche [AVAX]: How investors can make the most of the breakout of this pattern

Disclaimer: The conclusions of the following analysis are the sole opinions of the author and should not be taken as investment advice.

Over the past week, the altcoin market has seen a gradual recovery as the bulls have intensified their pressure. avalanche [AVAX] found a convincing close above its EMA ribbons within the four-hour timeframe.

But with seven-week trendline resistance (white, dotted) dampening the buying rallies, sellers kept an eye on the alt spikes. A robust close below the current pattern could propel a short-term decline in the coming days. At press time, AVAX was trading at $20.02.

AVAX 4 hour chart

Source: TradingView, AVAX/USDT

AVAX lost over 58% of its value (from May 23) and plunged to its ten-month low on June 19. Since then, the bulls have held the ground low of $15.95 while provoking two upside rallies in the past few weeks.

Altcoin price struggled to find a trend-altering rally as sellers restored strength to trendline resistance. For more than three weeks, this resistance has been providing rebound opportunities for sellers.

With the EMA ribbons looking north, the buyers were in control of the immediate trend. However, the price action has now approached its trendline resistance and the 200 EMA (green). Thus, a likely reversal from the $20 area could cause a pullback.

A sustained close below the bullish channel may prompt AVAX to retest the $19.1 mark in the coming sessions. Any close below this level would only affirm the sell story. To change this outlook, the bulls still needed to find a break above the $20 mark and trendline resistance.

Reasoning

Source: TradingView, AVAX/USDT

The Relative Strength Index (RSI) resonated with the recent increase in purchasing power by maintaining its position above the midline. A continued trajectory above the 56 support could help buyers prevent a drop below the EMA ribbons.

The On-Balance Volume (OBV) also iterated an increase in purchasing power, especially over the past four days. But the Moving Average Convergence Divergence (MACD) saw a bearish crossover and suggested an easing of buying pressure. A continued southward trend below zero could hurt the chances of a return to buying.

Conclusion

AVAX was walking on thin ice at press time. A drop below the pattern could worsen selling inclinations. In this case, the objectives would remain the same as above.

However, broader sentiment analysis alongside on-chain developments should be taken into consideration to make a profitable decision.