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Aave (AAVE) has recently captured the attention of the crypto market with an impressive 55% rally in just over a week. Breaking above key resistance levels, AAVE has now turned these levels into crucial supports. But with broader market sentiment still in the ‘Fear’ zone, the question on every investor’s mind is whether this bullish momentum can be sustained.
The Rally But From Wedge Breakdown to Bullish Surge
During the first week of August, AAVE faced a classic rising wedge breakdown, unable to break through the $116 resistance level. This failure initially signaled potential trouble for the altcoin. However, the rebound from the $89 support level ignited a significant bullish momentum. As a result, AAVE surged to trade at $135.68 at press time.
The recent price action saw AAVE approach the $142.68 resistance level, a critical barrier that bulls must overcome to maintain the upward trajectory. Notably, the surge in AAVE’s price was accompanied by strong trading volume, although the asset entered a high-volatility zone that could present challenges.
Resistance Levels and Market Sentiment
The Volume Profile Visible Range (VPVR) indicated strong resistance between the $135 and $142 levels, coinciding with a previous high-volume rally. This resistance zone is pivotal, and failure to break above it could trigger a pullback toward the $116 support level.
Adding to the cautious sentiment, AAVE’s technical indicators have turned overbought. The Relative Strength Index (RSI) recently reversed from the 75-zone, suggesting that a correction may be imminent.
Key Levels to Watch
Investors should keep a close eye on the $142.68 resistance level. If AAVE manages to break and sustain itself above this mark, the next target could be around $150. On the downside, a failure to hold above $129 could see the price revisiting the $116 support.
Interestingly, AAVE recently flipped the $129 level from resistance to support, indicating a potential re-test and subsequent consolidation phase. However, the overall market activity paints a mixed picture. Volume dropped by 33.05% over the past 24 hours, while Open Interest declined by 6.60%, hinting that some traders might be taking profits or closing positions following the rally.
Also Read: AAVE Whales Gobble Up $20M In Tokens Amid Price Surge
The long/short ratio for the last 24 hours stood at 0.9889, reflecting nearly balanced sentiment with a slight bearish tilt. Additionally, the AAVE/USDT long/short ratio on Binance was notably bearish at 0.2758, suggesting that a portion of traders expects a pullback.
While AAVE’s recent rally is impressive, the broader market sentiment and technical indicators suggest caution. Investors should closely monitor key resistance levels and market trends, especially as the altcoin enters a critical phase. Whether AAVE can sustain its bullish momentum or succumb to market fear remains to be seen, but the coming days will likely be decisive for the altcoin’s trajectory.
This nuanced situation calls for vigilance as AAVE bulls face a challenging path ahead.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
I’m a crypto enthusiast with a background in finance. I’m fascinated by the potential of crypto to disrupt traditional financial systems. I’m always on the lookout for new and innovative projects in the space. I believe that crypto has the potential to create a more equitable and inclusive financial system.
