Avalanche (AVAX) finds itself at a critical juncture, with prevailing market sentiment and detailed on-chain analysis strongly suggesting a potential downward price movement. Investors are closely monitoring its performance as various indicators coalesce to paint a largely bearish picture for the altcoin's immediate future.
Aggressive Shorting Dominates Trader Behavior
On-chain data reveals a significant shift towards a bearish outlook, largely driven by aggressive trader activity. Analysts highlight that AVAX traders are currently over-leveraged in short positions, particularly around key liquidation zones at $16.79 and $17.65. Across these levels, short positions outnumber long positions by a substantial margin, reflecting a strong seller dominance. Furthermore, the dominance of taker sell orders over the past week underscores a widespread belief among traders that AVAX is unlikely to rally in the near term, leading to persistent shorting of the asset.
Technical Outlook and Potential Price Decline
From a technical perspective, AVAX has been consistently trading within a descending channel pattern, indicating a sustained downtrend. Despite recent recovery attempts, the price has repeatedly encountered significant selling pressure at the channel's upper boundary, forming bearish candlestick patterns. Should AVAX fail to break above and sustain itself over the crucial $18 level, technical projections suggest a potential 18% decline, targeting the next support level at $14 and possibly even lower if bearish momentum persists. While the overarching sentiment leans bearish, some technical indicators, such as the Supertrend, have flashed green, hinting at a potential uptrend, though a weak Average Directional Index (ADX) points to subdued directional momentum, adding a nuanced layer to the otherwise strong bearish signals.
