Avalanche price stalled around the $21 mark on Thursday, August 15, maintaining a position above the $20 support level since the start of the week. Derivatives market data shows a spike in open interest in AVAX over the past three days, potentially signaling a major breakout.
Bears Increase Pressure on $20 Support
Avalanche posted double-digit gains last week during a remarkable rebound sparked by the approval of the Solana ETF in Brazil. The event boosted investor sentiment for Layer-1 Proof of Stake (PoS) coins like AVAX. However, the media hype has died down, and Avalanche has struggled to attract new buyers this week.
After last week’s 31.94% rally that peaked at $22.79 on August 9, Avalanche’s upward momentum has slowed. At the time of writing on August 15, Avalanche is trading at $20.85, reflecting a decline of 8.79% since the start of the week.
As you can see from the attached price action chart, Avalanche price has consolidated in a tight range over the past four days, suggesting that hidden bullish catalysts may be thwarting sell-off attempts.
The bears attempted to push the price below the psychological support level of $20. However, AVAX bulls have established a strong buying wall, preventing a reversal to the downside. This consolidation, coupled with stability around $20, may indicate potential for a breakout soon.
AVAX Open Interest Surges $200M After Weak CPI Data
The release of Dovish consumer price inflation data from the U.S. Bureau of Labor Statistics on August 14 is one such bullish catalyst. The data showed a slowdown in inflation, a positive factor that, although not immediately reflected in the AVAX spot market, changed sentiment in the derivatives markets.
Open interest, a key metric for understanding prices, has seen a notable increase. From $182 million on August 12, Avalanche’s open interest rose to $201.6 million by August 15. This represents an increase of $19.6 million, or about 10.77%, as shown in the accompanying chart. During this period, the price of AVAX has remained relatively stable, further indicating potential bullish momentum.
When open interest increases during a period of price consolidation, as is currently the case, it often signals that a significant price move is on the horizon. Two reasons why this could be bullish for AVAX include renewed trader confidence in the asset and the possibility of a short squeeze if bears fail to push the price below key support levels.
AVAX Price Forecast: Breakout from $20 Support Inevitable
A combination of technical indicators and market sentiment suggests that Avalanche may be preparing to break below the $20 support level. The Parabolic SAR (Stop and Reverse) indicator, as seen on the price action chart, is currently showing support at $18.17. This indicates that while the bears have been trying to push the price lower, they have not yet been able to break above this key support level.
Moreover, the Donchian channels, which measure volatility, are narrowing, indicating a decline in price action. This often precedes a significant breakout. With resistance at $23.42, a break above that level could lead to AVAX retesting $25.
In conclusion, if AVAX maintains its current support and open interest continues to rise, a bullish breakout looks increasingly likely. Traders should watch for a decisive move above $23.42, which could signal the start of a new uptrend to $25 and beyond.
