The price of Avalanche (AVAX) is flashing a bottom signal, retesting the support level of 16 dollars.

The price of Avalanche (AVAX) has once again tested the support zone that has maintained stability for the market since March, but the pressure in this area is now clearly much heavier than before.

A leading analyst on platform X stated that this is a strong support zone for “smart money” investors. Participating in the market at this time offers a balanced risk/reward ratio, appealing to those who know how to seize opportunities.

AVAX price breaks through the support level of $16: What lies ahead?

According to the analysis of @ali_charts on X, the price zone $16 has acted as a solid foundation for nearly eight months, each time the price reaches it triggers a significant recovery.

However, this time AVAX has broken through that important support zone, in a completely different market context.

As market momentum gradually wanes, the price structure becomes fragile, and the overall trend of the cryptocurrency market is sliding into a state of weakness.

On the daily chart, AVAX once fluctuated just above the 50-EMA moving average, which is the main trend indicator for most of the year. History shows that each time the price clearly breaks below this line on larger timeframes, it leads to deep and prolonged sell-offs.

The loss of both the 50-EMA line and the March support zone this time indicates that the stable trend in larger time frames has also been broken. In this context, the downtrend is not only continuing but also at risk of accelerating. The weekly chart further outlines the overall picture.

AVAX is currently trading in the zone that Carl Moon refers to as the “deep discount zone” – a setup he warned about two days ago.

Avalanche price chart ($AVAX) by Carl MoonThe current structure shows that if this support floor collapses, the price may slide deeper into the “smart money's buy zone”, where long-term investors typically accumulate after the market capitulates.

This zone is close to the bottom of the bear market, and the symmetry on the chart suggests that the market will need to test those lows again before forming a true macro bottom.

However, not everyone sees this as a negative signal. REKTbuildr believes that the current model resembles a potential bottoming structure.

In fact, AVAX has shown this behavior many times: long wick candles piercing down to support and then bouncing back strongly.

The difference this time is the convergence of weak signals, declining momentum, and continuous failure to establish new highs. As the price keeps returning to the support zone with increasing pressure, it often signals that demand is weakening.

If AVAX loses both the 50-EMA and the zone $16 , which has been the market's support point since March, the possibility of a deep decline is very high. The charts show that the strong sell-off really only began when the price fell below these levels.

Unless the bulls quickly regain control, the price of AVAX is at risk of a deeper correction – a scenario that often occurs before the long-term accumulation phase of large investors.

Derivative data shows that traders are actively defending

According to statistics from Coinglass, the AVAX derivatives market is clearly cooling down, with data showing that the market is gradually losing momentum instead of preparing for a strong recovery.

The trading volume has decreased by more than 50%, a strong contraction is often a sign that speculative interest is waning.

At the same time, open contracts also decreased slightly, reflecting the trend of traders closing positions rather than opening new ones.

When both the volume and open contracts decrease, it is a signal that the market is steering clear of risk. However, the long/short ratio tells a different story: on exchanges, traders are still leaning heavily towards buying.

The long/short ratio over 24 hours remains above 1.0, while at Binance and OKX, this ratio even exceeds 2.0 in many categories.

Top traders are clearly betting on the upward direction, but in the context of decreasing liquidity, this confidence could turn into a significant risk.

When confidence increases while liquidity decreases, the market can easily become a target for strong squeezes. Liquidation data further reinforces this pressure.

In the past 12 hours, nearly $418,000 in positions have been liquidated, mainly from traders setting up short orders.

However, if we look more broadly over 24 hours, the amount of long positions liquidated reached more than $600,000 – three times the short positions. This indicates that the buyers are gradually losing their initiative as the price attempts to stabilize.

Mr. Teacher