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Axie Infinity’s position was further weakened by a descending triangle, as the alt continued to lose ground after a remarkable run up to an ATH of $155.4. With the 4-hour candles trading below their 20-SMA and 50-SMA, another attack on the bearish pattern’s bottom trendline appeared imminent.
A close below the intersection of this baseline and the 38.2% Fibonacci level could result in another retracement for AXS.
AXS 4-hour Chart
The upper trendline of AXS’s descending triangle was formed by a series of steady lower highs, while the bottom trendline was formed by three contact points at the 38.2 percent Fibonacci level. If bears are able to break through this confluence, AXS could see an 11 percent drop into the golden Fibonacci Retracement zone.
Bulls would need to close above the 50-SMA (yellow) and 23.6 percent Fibonacci level to negate this outcome. A breakout in the opposite direction could even result in a mini-rally, but a double top at $155 would pose bearish risks.
According to a few indicators, it was still too soon to predict a breakdown. According to the Awesome Oscillator’s green bars, there was some bullish momentum in the market. The MACD was also approaching a bullish crossover and aiming for a reversal above its mid-line.
Finally, the RSI was closer to neutral than bearish readings. If each of these indicators remains close to their respective mid-lines, bulls may be able to extend the breakdown attempt and remove some of the market’s selling pressure.
Even if the indicators were in the midst of a recovery, such signals are frequently false in a lingering bearish pattern. As a result, traders should be wary of a short-term trend.
A better bet would be to short AXS once it closes below the 38.2% Fibonacci level. Stop-losses can be set slightly above the 50 percent Fibonacci level, while take-profits can be set slightly above a swing high of $125.8.