Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
- AAVE hit the price ceiling near $82.
- But the retracement has hit an area of confluence, including the 50 MA and 200 EMA.
Aave [AAVE] attempted a successful recovery but hit a key price ceiling and sell pressure zone of $80-$82. Nevertheless, the retracement has also hit a crucial confluence area of support that may undermine short-sellers, especially if Bitcoin [BTC] drops below $28k.
Read Aave’s [AAVE] Price Prediction 2023-24
Recently, AAVE revealed an expansion plan, with BNB Chain as the next likely destination for AAVE v3. Despite the potential good news for bulls, BTC’s fluctuations near $28k could also determine AAVE’s price action over the next week.
Will the confluence area prevent further drops?
The $80 – $82 zone has been a persistent supply zone since mid-March, both in the lower and higher timeframe charts. From 27 March, the bulls secured $68.8 and rallied 18% but were blocked by the supply zone. AAVE had retraced by over 5% at press time and traded at $76.4.
Meanwhile, Bitcoin struggled to keep above $28k. A drop below $28k could tip sink AAVE below the confluence of the 50 MA, 200 EMA and the $76 support level. But short-sellers may only gain leverage if they sink AAVE below the descending line and $75.
Alternatively, near-term bulls could be hopeful if they defended the confluence area. The next likely target if the $76 support is defended is the supply zone of $80 – $82. If AAVE overcomes the selling pressure, the next resistance levels lie at $83 and $85.
At the time of writing, the RSI (Relative Strength Index) retreated from the overbought zone and was below 50, indicating a drop in buying pressure in the past few days. Similarly, the OBV (On Balance Volume) dipped, showing that the demand for the token dropped slightly in the same period.
Mean coin age increased despite the declining trading volume
The mean coin age has consistently risen in the past few days, indicating that there has been a wide accumulation of AAVE tokens in the past few days, and a likely rally could occur.
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While this might be good news for bulls, the declining trading volumes, as seen by the drop in hourly active addresses, could tip the scale in favor of sellers.
However, sentiment remained positive and improved slightly at press time. But investors should track BTC’s price action for better trades.