Avalanche prices could double by the summer because AVAX’s 20% weekly rise rekindled the “bull flag.”

When Avalanche and Bitcoin have almost always moved in the same direction this year, that could make the bullish outlook look bad.

There is a good chance that the Avalanche (AVAX) market will go up by 100% in Q2. This week, there was a sharp rise back down.

Avalanche chart painting a ‘bull flag’

If you look at AVAX’s long-term bull flag setup, you’ll see that it was formed after a strong price move to over $150, which was an all-time high in the Avalanche market at the time. It’s made up of two parallel lines that go against the previous trend. The lines show a downward sloping channel, and the volume drops to show that the downtrend is weakening.

Ideally, bull flags end with a breakout move above their upper trendlines, followed by a long uptrend, with the profit target at the length of that uptrend (also called flagpole).

That could mean that AVAX’s price will rise even more in the coming weeks, starting with a close above its interim resistance of the 20-week exponential moving average (20-week EMA; the green wave in the chart above). Then, the flag’s upper trendline will be broken.

If AVAX goes up to $157, it could be worth more than 100 times what it is now at around $77.

AVAX price downside risks

There has been a lot of buying in the Avalanche market recently because it has a lot of good things to say about Bitcoin (BTC).

At the start of 2022, AVAX and BTC were almost moving in the same direction. Their correlation coefficient was between 0.90 and 0.99. However, as of March 17, the reading was around 0.79. This shows that Avalanche still prefers to follow the movement of the benchmark cryptocurrency.

However, because of the correlation, AVAX was exposed to the same risks that Bitcoin has been facing since November 2021, like the Federal Reserve’s quantitative tightening and the ongoing Ukraine-Russia conflict.

During the first rate hike since 2018 that the Fed made on March 16, Jerome Powell said that the US economy could handle a rise in interest rates.

Joel Kruger, a strategist at crypto exchange LMAX Digital, said that the central banker’s hawkish tone could make Bitcoin fall even more away from its all-time high of $69,000.

He told Bloomberg that if there is a “mass exodus out of risk assets,” it will “weaken everything.” Bitcoin could fall to $20,000, which will make “crypto assets” less valuable.

So long as AVAX’s bullish outlook is correct, it could be thrown out of the window. Because the 0.618 Fib line of the Fibonacci retracement graph was drawn from $9-swing low to $152-swing high, that could mean that prices could fall back to around $80.

If the correction occurs, AVAX’s next support line appears at the 0.786 Fib line around $64.

Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.

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