Avalanche (AVA): Overextended! Is This Ready for a Bullish Move?Avalanche (AVAX) is currently presenting an intriguing setup, with price action showing signs of being overextended on the daily and 4-hour timeframes. The cryptocurrency has recently traded into a critical support zone, defined by previous swing lows on the daily chart. This area has historically acted as a strong demand zone, attracting buyers. However, AVAX has now dipped below these lows, triggering sell-side liquidity in the form of stop-loss orders placed beneath this level. This liquidity grab could be a precursor to a potential bullish reversal. 🚀
On the 15-minute timeframe, AVAX is consolidating within a tight range, reflecting indecision among market participants. A break above this range, coupled with a bullish market structure shift, could signal the start of a reversal and provide a high-probability buy opportunity. This setup aligns with the concept of a "liquidity sweep," where price manipulates stop orders before reversing direction.
Key Observations:
Daily Timeframe: Price has dipped below key swing lows, eating into sell-side liquidity.
4-Hour Timeframe: Overextension is evident, with price trading into a significant support zone.
15-Minute Timeframe: Consolidation within a range, awaiting a breakout.
Trading Plan:
Wait for Confirmation: Monitor the 15-minute timeframe for a bullish breakout above the current range. 📈
Market Structure Shift: Look for higher highs and higher lows to confirm bullish intent. 🔍
Entry Strategy: Enter long positions after a confirmed breakout, with a stop-loss placed below the range low. 🛡️
Target Levels: Aim for resistance zones on the 4-hour and daily timeframes as potential take-profit areas. 🎯
Key Levels to Watch:
Support Zone: Previous daily swing lows (now acting as a liquidity zone).
Resistance Zone: The upper boundary of the 15-minute range and key levels on the 4-hour chart.
This setup highlights the importance of patience and discipline in trading. While the liquidity grab below support is a promising signal, confirmation of a bullish breakout is essential to avoid false moves. As always, this is not financial advice, and traders should conduct their own research before making any decisions. ⚠️
