- Currently trading within a bullish ascending triangle, AXS is approaching a support zone that could trigger a significant price rally.
- Short-term downward pressure is expected as indicators suggest temporary weakness.
Axie Infinity (AXS) has underperformed in recent weeks, falling approximately 5.42% over the past month after reacting to a major resistance level.
While the market remains clouded by the prevailing bearish sentiment, it is likely that AXS’ decline will continue as several indicators support this outlook.
A drop necessary for a recovery of the AXS
After bouncing off the resistance zone at $5.366 within its ascending triangle pattern, AXS has declined, and this downtrend may continue towards the formation’s diagonal support.
If AXS reaches this support level, it could resume its upward momentum, with an initial target at the pattern’s resistance zone.
A successful break above this resistance could result in an additional 28.47% upside, taking AXS to $6.895. This projection is based on the measured distance between resistance and support levels within the pattern, as shown in the chart below.
Source: Commercial View
Traders turn to selling as AXS faces downward pressure
Coinglass on-chain data analyzed by AMBCrypto reveals that traders are increasingly selling, signaling the potential for further price declines.
Recent liquidation data highlights significant losses for long traders, with $50.56k of $51.82k liquidated in the last 24 hours attributed to those betting on AXS prices to rise.
This shows that short traders have taken control, successfully betting against an AXS rally and likely pushing prices lower.
Source: Coinglass
Additionally, the funding rate at press time remains negative, reflecting higher demand for short positions as short traders are willing to pay long traders to hold their short positions, adding to the pressure down on AXS.
If these parameters persist, the decline of AXS is expected to continue until a change in market structure, potentially close to the historical resistance zone of the model.
The progressive compression of supply is accentuated
While AXS derivatives traders are largely short and expecting prices to fall, activity in the spot market reveals a different sentiment as traders prepare for a rally.
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According to Coinglass, $417.88K worth of AXS was removed from exchanges in the last 24 hours, reducing available supply and contributing to a possible supply squeeze.
This change suggests that bearish sentiment may be coming to an end, with a likely turning point on the horizon for AXS as bullish momentum builds.
