AAVE's price continues to rise, affirming its position as the largest lending protocol in the cryptocurrency market with a market cap of $5.5 billion—higher than the total of all 10 other leading lending protocols combined.
The token has impressively increased by 220% this year and 110% in just the last 30 days, driven by strong momentum and growing interest from the market. Technical indicators like RSI and CMF show positive trends underway, however, some signs suggest that momentum is cooling which could hint at a potential future correction.
AAVE's RSI Is At Neutral Level After Nearly Reaching Overbought Area
AAVE's current Relative Strength Index (RSI) is 59.2, down from 69.19 on December 23, when the price peaked at $382. This drop in RSI suggests that AAVE's price has moved away from the overbought territory, where significant buying pressure typically forecasts a price correction.
Although the current RSI still reflects strong momentum, this decline suggests that the market may be stabilizing after a strong buying phase.
RSI is a momentum indicator that measures the speed and strength of price movements on a scale from 0 to 100. Values above 70 indicate overbought conditions, warning of a potential correction, while values below 30 indicate oversold conditions, often leading to a recovery.
With AAVE's RSI at 59.2, the coin remains in a neutral to bullish range, indicating that the upward trend could continue in the short term if buying momentum rebuilds. However, the decline from overbought levels also suggests that AAVE's price may consolidate, allowing the market to absorb recent gains before deciding on the next direction.
AAVE's CMF Remains Very Positive but Decreased from Recent Peak
AAVE's Chaikin Money Flow (CMF) is currently at 0.17, maintaining the positive trend since December 23, when it peaked at 0.27. This indicates that AAVE is continuously experiencing strong inflows, reflecting strong buying pressure in the market.
Although the CMF has decreased from its recent peak, this positive value indicates that buyers are still in control, albeit with slightly reduced intensity.
CMF is a volume-weighted indicator that measures the accumulation or distribution of an asset over a specific period, ranging from -1 to +1. Positive CMF values indicate accumulation and buying pressure, while negative values indicate distribution and selling pressure.
With AAVE's CMF at 0.17, the positive inflow indicates that the token may maintain its current price levels or even continue to rise in the short term if the buying activity persists. However, the decrease from the peak on December 23 suggests that momentum may be cooling, leading to a consolidation phase before any drastic moves.
AAVE Price Forecast: Can AAVE Reach Its Highest Peak in 3 Years?
If the current positive momentum continues, AAVE's price could challenge the $400 level, an important threshold marking the highest price since 2021. The token only needs to increase by 7.5% to reach this milestone, supported by the formation of a golden cross on December 23 and the EMA suggesting that the upward trend could continue.
The arrangement of these technical indicators shows that bullish sentiment remains strong, with buyers likely to push prices higher if this trend continues.
AAVE Price Analysis. Source: TradingView
However, as indicated by the CMF, the strength of the bullish trend has weakened compared to a few days ago, suggesting the potential for a trend reversal. If AAVE's price momentum loses steam, the price may drop to test the support level at $355.
If this support level fails, AAVE could experience further declines, with potential targets at $297 or even $271, reflecting a significant correction.