Axelar [AXL] Experiences a 19% Rally Amidst Bearish Market Conditions – What Lies Ahead?

Summary:
Axelar [AXL] recently saw an impressive 1,200% surge in daily trading volume along with a 19.8% increase on January 25. However, the bearish trend initiated by Bitcoin [BTC] dropping below $88k is impacting the broader cryptocurrency market, including AXL’s performance.

Key Takeaways

AXL experienced a 19.8% rally on January 25, aided by a significant rise in trading volume.
Despite recent gains, the market structure remains bearish with AXL struggling to break past crucial resistance levels.
The market is facing selling pressure, indicating the need for cautious trading strategies moving forward.

Axelar [AXL] saw a notable 1,200% spike in its daily trading volume, along with a rally of 19.8% on Sunday, January 25. This uptick was overshadowed by a bearish trend, as Bitcoin [BTC] fell below $88k, affecting the broader market, including AXL's momentum.

AXL 1-day Chart
Source: AXL/USDT on TradingView

The 1-day chart indicates a bearish market structure following a drop on January 20. This decline triggered a movement below the $0.066 level, confirming a bearish continuation. Despite the recent rally that peaked at $0.083, AXL has struggled to close any daily trading period above a crucial resistance zone. However, this rejection of higher prices may only be temporary.

The On-Balance Volume (OBV) has reached new highs, surpassing levels seen in mid-December, and the 1-day Relative Strength Index (RSI) has also increased, remaining above the neutral 50 mark. This suggests that traders and investors might reasonably hold cautious optimism for a recovery. Yet, the bearish sentiment still looms large over higher timeframes. Currently, there has been no crossover in moving averages, and the bearish structure remains intact.

Axelar [AXL]

The Case for Bearish Sentiment on AXL

AXL 1-hour Chart
Source: AXL/USDT on TradingView

In light of the recent upswing on lower timeframes, Fibonacci retracement levels were examined. At the time of this analysis, AXL's price was nearing the 78.6% retracement level at $0.072. The RSI has dipped below the neutral 50 on the hourly chart, and AXL is trading under the 50-period moving average, collectively indicating the onset of a bearish phase.

Traders Should Exercise Caution – Stay on the Sidelines

While the surge in Open Interest and the rapid gains over the weekend may seem promising, they might not be sustainable. A thorough market correction and a period of consolidation could be necessary before bullish momentum can truly reform.

For AXL traders, the best course of action over the next week or two would be to watch for consolidation in the $0.065-$0.072 range and a potential gradual recovery. A drop below $0.065, however, should be viewed as a red flag, signaling a continuation of the bearish trend.

Final Thoughts

Disclaimer: This article is not intended as financial, investment, trading, or any other type of advice and reflects the personal opinion of the writer.