Avalanche [AVAX] has exhibited clear bullish tendencies lately. In fact, its most recent daily swing saw the altcoin post a double-digit percentage surge in price, with over 12% gains.
The rally still remains questionable in terms of sustainability though. Will the uptrend hold when viewed from the lens of the 1-month Liquidation Heatmap？
Well, the chart revealed that there seemed to be limited to no upside liquidity cluster. On the contrary, there were multiple clusters with strong depth below the press time price.
Source: CoinGlass
Clusters measure areas of unfilled orders on the price chart. These levels often act as magnets, pulling the price towards themselves.
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There are two scenarios likely to happen in the market. The limited to no upside liquidity cluster above the price means that AVAX could depend on momentum to surge further. On the flip side, however, the downward clusters could see the price pulled lower, causing AVAX to lose its recent gains.
Liquidity clusters leave AVAXs rally vulnerable
At the time of writing, clear accumulation was still ongoing for AVAX in the market. The Accumulation/Distribution Indicator (A/D) revealed that theres been massive buying as the volume-weighted purchase hit 122 million.
A hike in accumulation is indicative of where investor sentiment lies and their expectations, especially in the near term. In this case, however, while accumulation seemed to be ongoing, it didnt seem to be a clear-cut signal according to the Aroon Indicator.
Source: TradingView
This indicator uses two lines, Aroon Up (Orange) and Aroon Down (Blue), to show the markets directional bias over price. It seemed to confirm that AVAX was bullish, with the Aroon Up above Aroon Down. The scale of bullishness was low though.
This, because the gap between Aroon Up and Aroon Down was minimal. A bullish confirmation would stem from a noticeable gap, usually with Aroon Up at 100% while Aroon Down is at 0.00%.
AVAX needs to clear the lower high
At the time of writing, there wasn‘t much indication about the price action’s next direction.
However, in case of a confirmed bullish run, the price would need to clear out the liquidity levels ahead of it and see a decisive trading-day close above the lower high level.
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The price closing and trading above the lower high would nullify the structural leg down the asset has suffered in prior weeks, as well as the bearish trend.
Source: TradingView
A sustained rally from AVAX would need the price to maintain its bullish momentum. If not, theres a strong chance that the price could see lower levels from here on.
Final Summary
- AVAXs bullish momentum remains intact, but limited upside liquidity clusters could make further gains dependent on sustained buying pressure.
- Decisive close above the lower high could strengthen the bullish structure.