Key Points:
- AAVE retracing towards crucial $60 demand zone.
- Bitcoin’s influence on AAVE’s market dynamics.
- Technical indicators and potential price targets.
As of now, Aave (AAVE) is in the midst of a retracement towards a significant demand zone near the $60 mark. This movement is opening up possibilities for potential buyers, though this scenario largely depends on the performance of Bitcoin (BTC) in the near term.
AAVE has been holding onto its recent gains, maintaining a price level above $61. However, it’s currently undergoing a pullback towards the critical demand area around $60, presenting an enticing opportunity for bullish investors. Of course, this opportunity comes with a caveat: it largely hinges on how Bitcoin behaves.
At this moment, Bitcoin stands at a pivotal juncture, with its short-term support level at $26.4k under scrutiny. If this support level crumbles, it could trigger more selling pressure, potentially pushing BTC further towards its lower trading range. On the flip side, if BTC manages to reclaim the $27k mark, it might give the bulls some room to maneuver.
The big question is whether the bullish momentum will stage a comeback.
The Relative Strength Index (RSI) recently faced resistance in the overbought zone and retreated towards the neutral 50 mark. This indicates a decline in buying pressure as AAVE’s price dipped towards the demand zone and the daily bullish order block, spanning from $57.4 to $61.6 (in cyan).
However, the Chaikin Money Flow (CMF) tells a different story. It continues to show a steady rise above zero, signaling significant capital inflows over the past few days. This suggests that the demand zone could serve as a potential catalyst for a reversal, especially if BTC doesn’t extend its losses below the lower range of $25.8k.
As a result, we could anticipate a rebound for AAVE from the demand zone, with initial price targets set at $65, followed by the previous bearish order block ranging from $66.5 to $70.7 (in red).
It’s essential to note that a breach below the demand zone and the 50-day Exponential Moving Average (EMA) could potentially lead AAVE to test support levels at $56 or even $52.
Steady Open Interest Rates
Interestingly, despite the recent drop in prices, the surge in Open Interest rates observed since September 15th hasn’t seen a significant retreat. This suggests that there’s sustained demand in the derivatives market, even amid the price reversal. Furthermore, the long-term price action remains in an “uptrend,” as indicated by the positive Accumulative Swing Index (ASI).
Meanwhile, the Cumulative Volume Delta (CVD) is showing a downward trend, suggesting that sellers currently have more influence in the market.
In summary, for those looking to go long on this asset, it might be prudent to wait for a convincing bounce at the demand zone before considering entry.
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Disclaimer: The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, or other advice. Investing in or trading cryptoassets comes with a risk of financial loss.
