The AXS price is up 317 percent for the month, which is the greatest monthly return since November 2020 data.
The six-hour Relative Strength Index (RSI) of Axie Infinity is displaying a bearish momentum divergence with the price.
The April-May correction’s 261.8 percent Fibonacci extension is just 10% away from the present price, posing a new test.
Since the June 22 low, the AXS price has seen extraordinary relative strength, beating all of the cryptocurrencies on the watchlist by a significant margin. The resulting overbought state and elevation to a key Fibonacci extension level raises some doubts about the rally’s long-term viability at this point. It’s time for Axie Infinity to consider a slight correction in order to release the price compression in the future days.
Axie Infinity has blasted onto the spotlight with a 760 percent rally since its low of $2.78 on June 22. In fact, only four down days have occurred in the last 22 days, with the greatest loss coming in at just -11 percent. Since July 7, the daily RSI has maintained high oversold readings due to the speed with which the AXS price has risen.
It’s a noteworthy milestone in the cryptocurrency industry, as well as an intriguing backstory for a protocol that is based on CryptoKitties. Axie Infinity “is a blockchain-based trading and breeding game that is built on the Ethereum blockchain,” according to an FXStreet report from July 13. The friendly and popular free-to-play strategy that has allowed it to surpass PancakeSwap and other noteworthy dApps in terms of cumulative income has been key to its widespread acceptance.
The AXS price has risen near the crucial 261.8 percent Fibonacci extension level of the April-May drop around $26.40 as a result of the compelling fundamental tale. It’s a new technical obstacle for Axie Infinity, and it might be the only one since the company broke over its previous all-time high of $11.75.
Daily AXS/USD chart
The six-hour chart’s rising negative momentum divergence adds to the risk of an AXS price drop. The RSI does not support the current price highs, implying that the Axie Infinity rally is losing steam. Momentum fading is always identified on intraday timescales before it emerges on the daily chart, however momentum divergence is not an obvious sell signal.
6-hour chart of AXS/USD
Unless AXS price tags the 261.8 percent extension level immediately, there is no conclusive sell signal. Assume, however, that Axie Infinity begins a repair procedure. In such event, the confluence of the 38.2 percent retracement level of the June-July surge at $16.26 and the 10-day simple moving average (SMA) at $15.98, representing a 36 percent drop from the current price, will provide significant support. If that range is not held, a test of the 50% retracement level at $13.69 is possible.
It’s difficult to predict peaks, but the development of the 261.8 percent extension level, together with the growing momentum divergence on intraday timeframes, is beginning to stack the odds in favor of at least a little Axie Infinity drop. The exact timing is still up in the air./n
