AXS is now well positioned to keep an eye on this price level if a scenario materializes

Disclaimer: The findings of the following analysis are the only opinions of the writer and should not be considered investment advice

After reaching the ATH on Nov. 6, Axie Infinity (AXS) began its decline in a bearish channel as the bears continued to test the crucial $46 support.

Assuming the bulls can maintain this support, as they have for over six months, a break towards $54 before entering a tight phase seems likely. But any close below the 78.6% Fibonacci support would contribute to a $43 retest before packing itself towards the Bollinger Bands (BB) average.

At the time of writing, AXS was trading at $48.4, down 2.2% in the past 24 hours.

AXS daily chart

Source: TradingView, AXS/USD

The retracement phase marked a number of down channels (white) on the daily chart as the alt lost nearly 74.4% of its value (since November 6) and reached its six-month low on February 24. As a result, AXS struggled to hover above the average of its BB.

As a result of this trajectory, AXS lost the vital Fibonacci level of 61.8% and the crucial Point of Control (red) near the $50 mark. The decline stopped at the 78.6% Fibonacci level. The bears are eager to break through this level, while the bulls forgo further control. Thus, there is a strong clash between the buyers and sellers in the $46-$50 range.

Should buyers fail to defend this range, a possible retest of BB’s lower band would likely be ahead of a bullish rebound. In addition, given their historical behavior, the bulls could propel a rally and try to close above the checkpoint (POC, red). In either case, given the upward trend of its RSI, there is potential for a likely test of the $54 zone.

rode

Source: TradingView, AXS/USD

Over the past month, the RSI marked higher declines as AXS continued to test the $46 support level. This trajectory revealed the existence of a potential bullish divergence as the buyers try to build pressure.

In addition, the OBV confirmed this reading by conforming to the monthly uptrend. That said, the ADX still needs to improve its position and show a strong directional trend to confirm a solid recovery.

Conclusion

Given the underlying increase in buying pressure as reflected by the RSI and OBV, a likely break above the POC would position the alt for the test of its BB’s average. A close below the 78.6% support would cause a further decline before a rebound to the above level.

By the way, the alt shares a staggering 91% 30-day correlation with Bitcoin. Therefore, it would be essential to keep an eye on Bitcoin’s movement along with general market sentiment in order to make a profitable move.

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