Avalanche (AVAX) Flashes Potential Reversal Setup – Will It Bounce Back?

Date: Wed, June 04, 2025 | 06:10 PM GMT

The cryptocurrency market experienced a sharp pullback recently, dragging most major tokens into the red. Bitcoin (BTC) briefly dropped to around $105,000, while Ethereum (ETH) slipped to $2,600—both retracing from recent highs. This mini correction also impacted several altcoins —including Avalanche (AVAX).

AVAX saw a weekly decline of over 9%, trimming its monthly gains to just 5%. But despite the dip, a key structure forming on the lower timeframes is starting to show signs of strength — potentially hinting at a short-term bullish reversal.

Source: Coinmarketcap

Power of 3 in Play?

Zooming into the 15-minute chart, AVAX appears to be developing a classic “Power of 3” setup — a strategic market structure popularized by smart money traders. This setup consists of three critical phases: accumulation, manipulation, and expansion.

Accumulation Phase

Earlier this week, AVAX was seen trading sideways within a narrow price range of $21.61 to $21.12. This type of quiet consolidation is typical of the accumulation phase — a zone where institutional traders often begin building long positions away from retail attention.

This range-bound action suggested that the market was gathering liquidity before making its next directional move.

Avalanche (AVAX) 15 Min Chart/Coinsprobe (Source: Tradingview)

Manipulation Phase

Then came a sudden breakdown. AVAX plunged below the accumulation range, briefly hitting $20.72. This sharp move likely flushed out stop-losses and triggered panic selling among retail traders — a classic hallmark of the manipulation phase.

Interestingly, this move didn’t last long. The price bounced near the $20.72 support, suggesting that the breakdown may have been a false move — a trap designed to shake out weak hands before a reversal.

What’s Next for AVAX?

If AVAX manages to reclaim the $21.12 level, it could mark the transition into the expansion phase. A confirmed breakout above the upper range boundary at $21.61 would further strengthen the bullish case.

The projected upside target based on the pattern sits around $22.55, suggesting a potential rally of 7.71% from current levels. however to keep this reversal setup alive AVAX must hold the support of $20.72. However, to keep this reversal setup alive, AVAX must hold the support at $20.72. A sustained move below that level would invalidate the pattern and increase the risk of further downside.

Disclaimer: This article is for informational purposes only and not financial advice. Always conduct your own research before investing in cryptocurrencies.