Axie Infinity (AXS) price has fallen by nearly 30% two weeks after losing $625 million to a hacking incident involving its play-to-earn gaming platform’s underlying blockchain, the Ronin Network.
AXS/USD dropped to $46.69 on Monday, its lowest level since March 16, signaling a dampening buying sentiment among traders and investors following the hacking incident.
Independent market analyst TJ asserted that there is “no sign of buyers” even with the price entering areas with a history of attracting accumulators.
For instance, AXS broke below the demand zone that TJ highlighted as a potential inflection point during the weekend, a move that risked sending the price further lower towards its range support target near $45 this week.
AXS bounce back ahead?
The bearish prospects appear despite a strong assurance from Sky Mavis — the company that built Axie Infinity — that they would reimburse all the users who lost funds in the $625 million theft. Last week, the firm announced a $150 million raise, led by Binance, to honor its promise.
Additionally, AXS hints at more downside after painting a death cross between its 20-day exponential moving average (20-day EMA; the green wave) and its 50-day EMA (the red wave).
The area around the $45-level has earlier served as an accumulation zone for traders. For instance, its last retest as support in March had preceded a nearly 70% rebound move to around $75. Similar retracement moves occurred in January and February when the price fell to around $45.
Meanwhile, as AXS tests the key support level, it would also prompt its daily relative strength index (RSI) to move lower below 30 — an “oversold” signal. This suggests Axie Infinity could be due for a bounce higher in April.
Falling wedge confirmation needed
AXS’s price is already “oversold” on its four-hour chart, according to its RSI readings near 25. Meanwhile, AXS is breaking out of its prevailing falling wedge pattern to the downside despite it being a bullish reversal pattern in theory.
The support confluence — featuring an oversold RSI and the accumulation zone near $45 — raises the AXS’s potential to re-enter the wedge range, followed by a breakout to the upside.
If this happens, AXS/USD could move toward $58, a key March 2022 resistance level, based on the falling wedge’s theoretical profit target, measured after adding the distance between its upper and lower trendlines to the breakout point.
Conversely, breaking below the key support area near $45 could trigger AXS’s head-and-shoulders (H&S) setup on longer timeframe charts.
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That is primarily because the $45-level serves as the pattern’s neckline. As a rule, a break below the H&S neckline support shifts the asset’s downside target to the level at a length equal to the maximum distance between the head and the neckline, as illustrated in the chart below.
As a result, the H&S setup risks sending AXS’s price toward $12 on a decisive breakout below its neckline.
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