Aave Price Analysis: AAVE Prints Extremely Bearish Pattern Amid Looming Declines

2 Min Read
Last Updated July 23rd 2021
  • A descending triangle pattern sends bearish impulse as Aave risks resuming downtrend.
  • AAVE transaction history highlights an immense resistance likely to hinder price movement.
  • The level of interaction shoots up as active addresses recover.
  • Aave gained 4% over the last 24 hours but lost 1.2% of its value on an hourly basis. Before the most recent upswing, stepping above $400, the decentralized finance token (Defi) had embraced support at $300. An all-time high achieved at $580 in February marks the highest resistance level.

    Meanwhile, holding above $400 is challenging, perhaps due to the massive seller congestion at $430. At the time of writing, AAVE dodders at $391 amid rising overhead pressure. If the technical outlook fails to change, a substantial correction may come into the picture.

    Aave in Grave Danger as Descending Triangle Matures

    The daily chart brings into light a descending triangle. This pattern is highly bearish and usually leads to a significant correction. Note that descending triangle patterns are molded using two trend lines connecting the relatively equal lows and the declining peaks.

    A breakdown is usually anticipated as the price cracks the x-axis support. Moreover, triangle patterns tend to have exact breakout targets measured from the highest to lowest points.

    For now, support at $390 and, by extension, the 50 SMA is key to sustaining the recovery back to price levels beyond $400. However, if the overhead pressure intensifies and losses extend under the x-axis, AAVE may fall into the abyss as the triangle impact sets.

    AAVE/USD Daily Chart

    According to the IOMAP on-chain model by IntoTheBlock, Aave may face a challenging path on breaking above $400. The intense resistance runs from $408 to $419.5. Here, nearly 2,500 addresses previously bought around 2.3 million AAVE.

    On the downside, support is not absent but does not seem as strong as the hurdle mentioned above. The most significant buyer concentration zone runs from $372.4 to $383.4. Here, roughly 4,600 addresses had previously bought around 1.8 million AAVE. If this support holds, the token may settle for consolidation. However, if shattered, the price will drop to $300.

    AAVE IOMAP Chart

    Looking at the Other Side of the Fence

    The “Daily Active Addresses” on-chain metric by ITB reveals that active addresses tracked on a 30-day moving average have begun to recover. The chart shows the addresses bottomed out at 1,500 on March 28 but have risen to nearly 2,400 at writing. As the addresses grow, speculation intensifies, and bulls increase their positions, building the momentum behind AAVE for sustained gains above $400.

    Aave Active Addresses

    Simultaneously, the Moving Average Convergence Divergence (MACD) indicator suggests that the slightest resistance path is upward. This follows the return into the positive region as well as the MACD line (blue) jump above the signal line. If this technical picture holds, we can expect the downswing to be ignored as bulls resume control.

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