Axie Infinity (AXS) has rallied 135% month-to-date to hit roughly $14 on Jan. 23, its highest level in two months. However, the AXS/USD pair could suffer significant losses in the coming weeks due to a series of negative technical and fundamental indicators.
Axie Infinity price prints a “tombstone” doji
The AXS price formed a “tombstone doji” candlestick on January 23, which technical analysts view as a bearish reversal pattern.
A tombstone doji appears when the open, close, and low price of an asset become almost identical, except for the highest price, as shown in the chart below. The long upper wick shows that the bears clipped all the gains printed by the candlestick during the given session.
AXS appears to have been forming a similar candlestick pattern as of January 23, with the bears rejecting its advance above the $14 price level, causing an intraday price decline of more than 10%.
Also, The rejection came as the AXS/USD pair’s RSI crossed into overbought territory, coinciding with its price testing the 200-day EMA (200-day EMA; the blue wave on the chart above). , which has served as resistance in January 2022 and April 2022.
These three factors have raised the possibility that AXS will experience a price correction in the coming weeks. The nearest downside target for AXS comes in near its 50 day EMA (the red wave) around $8, or a 40% drop for March.
The total supply of Axie Infinity increases by 1.8
From a fundamental perspective, the price of Axie Infinity could drop in the coming weeks due to its latest supply unlock.
On Jan. 23, AXS’s circulating supply grew by 4.8 million, around 1.8% of its total supply of 270 million, following a scheduled unlock of purchased tokens. In theory, more supply could drive prices down if demand doesn’t increase.
Token unlocking coming ⚠️⚠️⚠️
No #fomo guys this one…looks like #bulls are doing exit pump on $axs pic.twitter.com/azSvRYjZ7m
— KalababaS crypto world (@KalababaS) January 23, 2023
Bullish hopes on AXS price remain
However, on larger time frame charts, AXS appears to have formed a falling wedge, which analysts treat as a bullish reversal pattern.
The ongoing AXS rally has caused the wedge that has been in place since May 2022 to break out.
In theory, this move could mean that the price could go as high as the maximum height of the wedge. In other words, the bullish price target for AXS is now around $22.50, almost 70% above current prices.
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