Avalanche (AVAX) stands before a breakthrough opportunity thanks to strong buying power from the bulls

Avalanche (AVAX) remains in the green above the $10 mark as of Monday, continuing a roughly 13% rally recorded last week. The token of this Layer-1 blockchain is gradually attracting renewed interest from retail investors, amid initial signs of recovery in the cryptocurrency market despite escalating US-Iran tensions.

Derivative data shows optimistic sentiment from retail investors

Avalanche saw increased buying pressure from retail investors on Monday, fueling the ongoing recovery. Data from CoinGlass indicates that AVAX’s open interest (OI) rose 10% in the past 24 hours, reaching $480.16 million, reflecting a risk-on appetite as traders actively open more positions in AVAX futures.

The funding rate based on OI is currently at 0.0074%, suggesting a bullish trend as traders are willing to pay higher fees to maintain long positions. Meanwhile, liquidation data over the past 24 hours also supports this optimistic outlook: short positions were liquidated for up to $745,980, far exceeding the $66,500 in long liquidations, indicating many traders betting on a downtrend have been forced to close their positions.

Derivative data for AVAX | Source: TradingView

Rally after breaking the downtrend

At the time of writing, AVAX has gained about 5% on Monday, following a 2% increase in the previous session. The recovery momentum was strengthened after the price broke above the descending resistance trendline — a factor that previously limited upward movement during the market’s weakening phase.

In the short term, AVAX’s outlook remains positive as the price stays above the SuperTrend indicator and approaches the 50-day exponential moving average (EMA) at $9.96. However, the 100-day and 200-day EMAs are still trending downward, indicating that the current rally may only be a rebound within a longer-term downtrend that has not yet been fully reversed.

If AVAX closes the day above $9.96, a bullish breakout above the 50-day EMA will be confirmed, opening the door for further gains toward the next resistance zone. This area includes the December 18 low at $11.28 and the 100-day EMA around $11.62.

Daily AVAX/USDT chart | Source: TradingView

Momentum indicators also support the upward scenario. The RSI is currently at 65, approaching overbought territory, reflecting increasing buying pressure. Additionally, the MACD has crossed above the signal line, with green histogram bars expanding, indicating that buying momentum is gradually gaining strength.

Conversely, if AVAX fails to hold above $9.96, the price could retest the support zone around $9.50 — the previous resistance level. If this level is broken, the next significant support is at $8.24, a price level last tested on February 25.