Throughout 2021, Aave visited the $160 zone only twice (after crossing it in early January), until December. In December alone, the price tested the area in two separate times, a candle during a sharp sell-off and a test around this demand area in mid-December. At the time of writing, Aave was rejected at the trendline resistance but managed to climb above $228. Has Aave started to reverse its trend?
Source: AAVE/USDT on TradingView
Two sets of Fibonacci retracement levels have been charted, one between $459 and $157.6, the November and early December drop (in white). What remains is an impulse move above $200, from $157.6 to $296.8 (yellow) at the trendline resistance (blue).
The price tested the 78.6% retracement level at $187.4 and rebounded, with the 61.8% level also being a hotly contested level. The bounce from the deep retracement rose above $228 once again.
There is a confluence between the two sets of retracement levels at $228. At the time of writing, the price has pushed above this level and a daily close above it will be a bullish development over the next few days. A retest of this level would be a buying opportunity.
The price has hit higher lows over the past few weeks, after a daily close above $270. The move should give bulls some hope, but there has been some resistance above it in the process. past.
Theoretical basis
Source: AAVE/USDT on TradingView
The daily RSI has gone from oversold, almost all the way up to the 70 mark following the strong upside move in mid-December. At the time of writing, the RSI is back below the 50 neutral level. In the past, the value of 40 and its vicinity has seen a daily rally in RSI and this has repeated itself again in recent days.
The great oscillator is below the zero line, but only weakly. This shows that, rather than a bearish momentum, it was the result of a deep pullback.
The Accumulation / Distribution line has closely followed the price movement and there is no divergence. In the past few days, the amount of buying is more than the amount of selling.
Inference
Trendline resistance started in August and is the level that needs to be broken before the long-term trend can reverse. The formation of a higher low after $160, in the $200 area, is encouraging. A daily close above $228, followed by a retest, seems like a possible route for AAVE in the coming days. A break above the $260-$270 pocket of liquidity could see AAVE climb to $300 and $340.