Avalanche (AVAX) Falling Wedge Setup Predicts 40% Boom Next

A recent sharp rebound in the Avalanche (AVAX) crypto market could mature into a full-fledged breakout if a classic bullish reversal pattern plays out as intended.

Avalanche Eyes 40% Gains by August

Notably, AVAX’s price has been forming a falling wedge pattern since May, characterized by the price consolidating inside a range defined by two descending, converging trendlines.

As a rule of technical analysis, a falling wedge pattern resolves when the price breaks above its upper trendline while accompanying a rise in trading volumes. Meanwhile, the breakout target for a falling wedge is calculated by measuring the maximum distance between the pattern’s upper and lower trendlines and adding this distance to the breakout point.

As of July 10, AVAX was testing its wedge’s upper trendline as resistance, eyeing a decisive close above the barrier in the coming days. Should a breakout occur, the AVAX’s upside target for July or August could be around $38—up approximately 40% from current price levels.

However, if AVAX’s price closes above the wedge’s upper trendline but the daily relative strength index (RSI) does not also break its own descending trendline resistance, this could lead to a bearish divergence.

In other words, even after breaking out above the upper trendline, AVAX’s price might fall back into the falling wedge range, a move witnessed in the falling wedge pattern in Cardano (ADA) markets recently.

Such a scenario may see AVAX continuing lower inside its wedge pattern, at least until its price reaches the pattern’s apex—where the two trendlines converge—at $18.20. This level was instrumental as support in November 2023.

Avalanche Crypto Market Dominance is Declining

Like Cardano, Avalanche has been one of the worst-performing cryptocurrencies among the top-ranking ones, with its year-to-date returns at around -35% as of July 10. Simultaneously, AVAX’s crypto market dominance has declined to 0.50% from around 0.92% in the same period, indicating weaker demand compared to the border crypto market.

Interestingly, both assets have underperformed relative to their emerging layer-1 blockchain token rival, Toncoin (TON), thanks to the latter’s association with Telegram, a messaging service with over 900 million users worldwide.

Fundamentally, Avalanche has been attempting to grow its relevance, namely with a recent introduction of the Interchain Token Transfer (ICTT). This system, launched on July 3, facilitates token transfers between layer-1 blockchains, aiming to simplify the process of creating and auditing smart contracts for token bridging.