Avalanche’s Bumpy Road to Recovery
After suffering a staggering drawdown of more than 95% from its all-time high in 2021, Avalanche (AVAX) is beginning to show promising indicators of a potential high-timeframe reversal. As the price stabilizes at a key macro support level, the asset is forming an emerging Elliott Wave structure on its weekly chart, which could signify a critical turning point in the ongoing market cycle.
Weekly Elliott Wave Structure Points to Inflection
Currently, AVAX is navigating within a vast descending channel that has defined its trajectory since reaching $146 in late 2021. This broader structure suggests that while the asset continues to operate within a long-term corrective phase, newfound technical signals indicate a possible macro inflection point.
Crypto analyst Crypto Patel observes that AVAX appears to have completed its first wave of the Elliott Wave sequence with a macro low around $5.67. The asset is now transitioning into the early stage of a Wave 2 recovery phase, a crucial juncture that often determines the sustainability of any subsequent price expansion.
Key Technical Developments
The weekly chart reveals multiple noteworthy developments. Wave 1 seems to have solidified within the $8 to $5 macro bottoming zone, establishing a potential support base. Simultaneously, AVAX continues to trade within the larger descending channel that marks its downtrend. Technically, this indicates a classic bearish breakdown followed by a retest of the lower trendline, known as a deviation setup.
Additionally, AVAX executed a liquidity sweep into the weekly demand zone located between $8 and $7. The overall fractal structure bears resemblance to the compression phase seen in previous cycles before a significant expansion.
Path to Recovery: Ambitious Targets Ahead
With an eye on future price movements, Crypto Patel outlines an ambitious roadmap for AVAX, setting sequential targets at $33, $58, $97, and ultimately $147. Should the broader channel expansion scenario materialize by 2026-2027, the price could trend toward the upper boundary of the multi-year descending channel, indicating a staggering potential expansion of 2,489% from its recent lows.
Critical Support Levels
The bullish narrative hinges on Avalanche maintaining its position above the $5.50 level on a weekly closing basis, which acts as the Wave 1 low and last significant structural support. Holding this level would preserve the overarching recovery structure and keep the Wave 2 continuation scenario alive. Conversely, a confirmed weekly close below $5.50 would invalidate this bullish setup, signaling structural weakness in the asset.
As it stands, this remains a high-timeframe opportunity that requires patience, providing an attractive asymmetric risk-to-reward ratio, making it particularly suitable for long-term holders and those looking to accumulate spot positions.
Conclusion and Market Outlook
In summary, Avalanche is showing early signs of a recovery after a severe market downturn. The current formation of an Elliott Wave structure could mark a significant shift in its price action, provided key support levels hold. Investors should watch for sustained strength in AVAX’s weekly performance to confirm the bullish narrative and navigate toward ambitious targets in the coming years.
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