AXS shows some short-term strength but a resolute resistance zone looms ahead
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Disclaimer: The findings of the following analysis are the sole opinions of the author and should not be considered investment advice.
Bitcoin [BTC] fluctuated between $20,000 and $19.9,900 in the 12 hours before press time. It has failed to recapture the $20.4000-$20.5000 area as support in recent days. Bitcoin’s short-term bias was bearish, and a retest of the $19.2000 mark could materialize.
Despite this background, Axie Infinity [AXS] was somewhat bullish and looked likely to gain some upside in the coming hours. Caution was advised, and a risk-averse trader could wait for AXS to reach resistance to short the asset instead of taking a long position.
AXS- 1 hour chart
The one-hour chart showed significant volatility in recent weeks. For most of the past two weeks, AXS has been trading between $14.84 resistance and $13.2 support. The rising cyan trendline has also acted as support in recent days.
The price managed to rise above the $14 mark and turn it into support (cyan box). A retest of this area could provide a buying opportunity with a tight stop-loss just below $13.77.
The $14.8 area (red box) and $15.4 area can be used to take profit. However, due to the underlying uncertainty of Bitcoin, aggressive profit seeking can be beneficial. The weekend has arrived and reduced liquidity can see big moves within a short period of time.
The moving averages for Episodes 21 and 55 have bounced off each other in recent days, highlighting the lack of strong momentum.
The relative strength index (RSI) rose back above the neutral 50 the previous day. However, it hasn’t really broken the 60-65 range in the last week. Thus, it was possible that another raid towards 65 could see AXS pull back.
An encouraging observation for bulls was the formation of higher lows in On-Balance Volume (OBV). Buyers have been a bit stronger in the past week, but OBV still couldn’t break the resistance. A move past resistance combined with a move above $14.84 could lead to a strong rally for AXS.
Short-term price action highlighted that the $14 turn into support meant a likely move towards $14.8. The trend line (cyan) can also be expected to act as support. To the north, $14.8 and $15.4 are significant resistance areas. Aggressive profit booking can be a safer route for a bullish trader.