AAVE [AAVE] triggered a rally over the weekend after stimulus measures and interest rate cuts spurred gains in the cryptocurrency market. It has continued to rise over the past 24 hours, gaining nearly 2.9% to trade at $158 at press time.
These gains have allowed the coin to recover from its lackluster performance earlier this week. Following this uptrend, AAVE has broken above the middle line of the ascending parallel channel on the daily chart, suggesting that bulls are gaining strength.
For AAVE to break out of the upper boundary of this channel, it needs support from buyers. Three consecutive green volume bars show that buyers have taken control of the price action. This supports AAVE breaking out of the midline. Moreover, the On Balance Volume (OBV) indicator has been trending upwards. The indicator has also broken out of the smoothed line, also indicating that most investors are turning bullish. For AAVE to break out of the ascending channel and confirm the bullish thesis, it needs to overcome the resistance at the 0.236 Fib level ($170).
AAVE exchange outflow data is bullish
Buyers are likely to continue to dominate as exchange inflow data shows that traders are withdrawing AAVE from exchanges at a high rate.
On October 12, foreign exchange outflows hit their highest level in a month, showing investors' reluctance to sell.
If more traders withdraw their tokens from exchanges, this will ease short-term selling pressure and pave the way for a strong bullish trend.
Some technical indicators are bearish
Capital is still flowing out of AAVE, judging by the Chaikin Money Flow (CMF). At press time, the CMF score is -0.17.
Despite the rising prices, the indicator has also been forming lower lows, suggesting a weak prevailing trend.
The Moving Average Convergence Divergence (MACD) is below the signal line, also showing a bearish bias.
However, the MACD line is sloping northwards and if it crosses above the signal line, it will confirm that the altcoin has entered an uptrend.
The long/short ratio on Coinglass indicates that derivatives traders are bearish.
In the past 24 hours, the ratio has fallen from the neutral level of 1 to 0.87, indicating that market participants are not convinced of the continued upward trend.
On Binance, the number of long accounts dropped significantly, from 60% to 47%. Meanwhile, the number of short accounts on AAVE increased from 39% to 52%.
The change in the ratio suggests that traders increased their short positions after AAVE started to rise, indicating their strong belief that the uptrend might fail.
Whale buying frenzy returns, AAVE hints at major reversal pattern breakout!
According to Lookonchain analysis, a cryptocurrency tycoon recently purchased 31,173 AAVE tokens, worth about $4.8 million, and deposited them into Aave. Shortly thereafter, the tycoon borrowed about 2.7 million GHO stablecoins from the Aave protocol and exchanged them for USDC.
These stablecoins are being deposited on the Coinbase exchange to acquire more AAVE, boding well for the future of this smart money. The use of the Aave-related stablecoin GHO further demonstrates confidence in the Aave ecosystem.
Santiment’s supply distribution metric shows that large holders of between 1 million and 10 million AAVE initiated a buying spree in August. This accumulation has now reached 4.17 million AAVE, highlighting the strength of whale activity.
This trend indicates that large investors are becoming increasingly confident in AAVE’s price potential, potentially hinting that the market has further upside momentum.
Following the sell-off in early October, the AAVE price has managed to stabilize above the $135 support level since last week. The support is supported by the 50-day exponential moving average and the 38.2% Fibonacci retracement level, providing a solid foundation for a potential price reversal.
The 38.2% FIB is often viewed as an ideal retracement zone for buyers to regain control after the bullish momentum is exhausted. The recent reversal has seen the asset rise 12% to trade at $158 and has formed a bullish reversal pattern known as a double bottom.
The chart setup resembles a ‘W’ letter, suggesting a renewed bullish momentum for a breakout opportunity. If the pattern holds, AAVE price gains could break above the $160 neckline and fuel a post-breakout rally to $180 and then $200.
AAVE has now broken through the midline of the ascending channel. Despite a surge in exchange outflows, technical indicators show that the trend has not yet turned bullish. But the whales' buying frenzy provides confidence to the market, and a major pattern has been formed. Although the indicators are mixed, the rise is bound to come!
