- Avalanche gained 60% in less than three months
- Despite the returns, the bearish bias persists
- For bulls to have a case, the price should break out of a falling wedge pattern
The cryptocurrency market investor had a rough 2022 as the market tanked. But as bearish as the price action was last year, as bullish it is in 2023 so far.
With a little over a week before the first quarter’s end, leading cryptocurrencies have rallied hard from their lows. Avalanche, for instance, gained 60% YTD, rallying together with Bitcoin.
60% is a tremendous return over any period, let alone over less than three months. Yet, delivering such returns is not unusual for the cryptocurrency market.
So where will AVAX/USD go from here? Will the bull run continue, or should investors book their profits and wait for the next opportunity?
The bearish bias persists while a falling wedge remains intact
Avalanche found strong support at the $10 area and then rallied in 2023. But despite the returns delivered so far in the year, the bias remains bearish.
Bulls are probably encouraged by a falling wedge pattern currently in the making. Indeed, a falling wedge is a bullish pattern, as it appears at the end of bearish trends.
However, the signal to trade the market to the upside comes after the price breaks above the upper edge of the pattern. In other words, until then, it is just speculation, as the reversal pattern may be invalidated anytime.
Therefore, those that bought Avalanche at the start of the trading year may find it wise to book some partial prices and wait for the price to move above the upper trendline. That is, above $20.
The next level of resistance should be the $30 area, and from then on, the target is half the distance it took the pattern to form. On the flip side, if the price drops below $10, the reversal pattern gets invalidated, so that is the exit for any bullish setup.