Avalanche saw a positive surge on Monday, rising 6.25% to a high of $10.61 reached during the early Asian trading hours on Tuesday. AVAX price is currently trading at $10.44, up 4.5% over the last 24 hours. Its daily trading volume is up 20% to $126,891,065, suggesting increased investor interest in the Layer 1 token over the last day.

It has a market capitalization of $3.6 billion placing it at position 18 on the CoinMarketCap ranking.

Zooming out to the long term view, Avalanche has experienced challenges, dropping 20% over the last 30 days, and 27% over the last quarter. The yearly decline has been worse at 43% lower than 12 months ago.

What does this short term positivity and long-term bearishness tell us about the next step AVAX price is likely to take?

AVAX Bulls Could Exploit the a Rounded Bottom Pattern to $10.9

On August 21, the Avalanche price embarked on a steady downtrend that saw the token lose over 9% of its value. This downturn was, however, halted at the $9.90 support wall. This gave the bulls time to regroup and buy more before embarking on a recovery.The recovery since then has been steady as well with AVAX rising 5.5% to the current price.

This price action has formed a rounded bottom chart pattern on the four-hour chart as shown below. This technical formation is considered bullish in technical price analysis due to the potential signals it provides regarding a trend reversal from a downtrend to an uptrend. This pattern is identified by a gradual and rounded curvature at the bottom of a price chart, resembling the shape of a saucer or a U.

To confirm the chart pattern, AVAX has to move from the current price to produce a four-hour candlestick close above the $10.6 supplier congestion level. This would see the altcoin rise to confront resistance from the 200 Simple Moving Average (SMA) at $10.84 before reaching the rounded bottom's neckline at $10.91.

Such a move would represent a 4.43% uptick from the current price. Traders should note that Avalanche's upside could be capped here in the near term.

AVAX/USD Daily Chart

In the long term, the technical pattern could be confirmed once AVAX breaks above the resistance level formed by the top of the rounded bottom at $10.91. This breakout signals that buyers have gained the upper hand, and an uptrend is likely to follow.

This would set Avalanche on a clear path to reach the technical target of the governing chart pattern which is set by measuring the pattern's height from the lowest point of the rounded bottom to its highest point, then project that distance upward from the breakout point. This projection can provide a target price for the potential uptrend.

In this case, the technical target is set at 9% above the neckline to $11.90, representing a 13.86% climb from the current levels.

Supporting this positive outlook for AVAX were the up facing moving averages. Note that the MAs had sent a call to buy Avalanche on the four-hour chart. This happened during the early Asian trading sessions on Tuesday when the fast-moving 50 SMA crossed above the 100 SMA, to produce a bullish cross. This means that the market conditions have flipped in favor of the upside.

In addition, the Relative Strength Index (RSI) was also moving upwards. Its position at 61 suggested that the bulls were in control of the price. Avalanche's upward trajectory will gain traction once the RSI crosses the 70 line into the overbought region.

Moreover, the Moving Average Convergence Divergence (MACD) indicator was pointing upwards with the MACD line moving above the signal line. This reinforced the buyer's grip on the price, adding credence to the positive narrative.

On the downside, a drop below $10.35, a level currently embraced by the pattern's support line would invalidate the bullish thesis as AVAX drops to record lower lows. The first line of defense would emerge from the $10.19 demand zone, where both the 100 and 50 SMAs lie. Losing this foothold would spell doom for the crypto bringing losses to