Axie Infinity (AXS) has bounced at an important horizontal support level and could potentially initiate an upward movement towards $91.
AXS has been falling since Nov. 6, when it hit an all-time high of $166. So far, it has decreased by 67%. This led to a low of $4.42 on January 24.
The low served to validate the $51 horizontal area as support. Previously, the area had acted as resistance in July (red icon) before turning to support in Sept (green icon).
If the rebound continues, the nearest resistance zone would be at $91. This is the resistance level at the 0.382 Fib retracement.
Cryptocurrency trader @Murfski_ noted the importance of this area, suggesting that a bounce could transpire once it is reached.
Oversold readings
Technical indicators for AXS in the daily timeframe do not yet confirm the possibility of a bullish reversal. However, they show that the rally is extremely oversold. This is especially visible in the RSI, which is a momentum indicator.
On Jan 22, the RSI reached a new all-time low of 24. It also created a double bottom relative to the value on Jan 8. Values below 30 are considered oversold.
On top of that, there is increasing bullish divergence in the MACD histogram. While not as strong a bullish sign as the MACD divergence itself, it still supports the possibility of a significant rebound.
Short-term AXS movement
The two-hour chart shows that AXS has completed a five wave downward movement that began on Jan 17. Therefore, a considerable bounce is expected.
The closest resistance levels lie between $59.6 and $64.2. They are created by the resistance region at the 0.382 – 0.5 Fib retracement. The latter is also a horizontal resistance zone, which further increases its importance.
