AXS has tumbled since its ATH of $166.09 in November 2021. The downtrend so far has led to AXS price sinking to a new low of $16.20 in May. The subsequent bounce (green icon) served to confirm the $20 supporting zone, which had not been reached since July 2021.
The entire downtrend was preceded by a strong bearish divergence in the weekly RSI, the trendline of which is still intact. Until the trendline is broken, the trend cannot be considered bullish. If the recovery continues, the nearest resistance zone would be at $50.
The double bottom leads to bouncing
From May 12 to May 20, AXS created a double bottom, which is considered a bullish pattern. In addition, this pattern is combined with a bullish divergence in the RSI (green line). As a result, its strength is regained. Furthermore, the RSI has now moved above 50, another sign of the bullish trend.
As long as the trendline of the divergence remains intact, the bullish is likely to continue. If so, the nearest resistance levels will be between $39 and $46, which are the 0.382 to 0.5 Fib retracement resistance levels.
Trader @Mesni_burek tweeted an AXS chart, showing that the price is correcting after completing a five-wave rally.
Though the price may have completed a five-wave bullish cycle since March 2021, the downside count is less certain.
Maybe the drop is a finished A-B-C structure. However, wave B did not retrace sufficiently from wave A and wave C has no relation to A. So, the number of waves that replaced the drop would be a completed 5-wave downward impulse.
While this means that the AXS will eventually sink to lower levels, the short-term movement will be the same, in which a significant bounce towards $74 is expected.
Disclaimer: This article is for reference purposes only, not investment advice. Investors should have deep research before making a decision. We are not responsible for your investment decisions.
Follow our channels for more crypto news: