Crypto analyst Altcoin Sherpa has shared insights on AAVE’s price movement, urging caution despite market enthusiasm. The analyst suggests waiting for a potential drop to $110 before considering entry.
This level aligns with key technical indicators and increased liquidity, offering a more favorable risk to reward ratio for traders.
Moreover, he advised traders to wait for more retracement before considering a purchase. His analysis emphasizes the importance of patience, particularly as the market shows signs of increased volatility.
$AAVE I marked these levels before but I honestly don't think I'd want to buy until $110; a lot more liquidity there + 200 ema on the 4h. Lots of shills on the timeline before but always best to be patient in these situations pic.twitter.com/QOkonfolJW
— Altcoin Sherpa (@AltcoinSherpa) August 27, 2024
AAVE’s Price Action and Key Levels
AAVE is heading toward the 0.382 Fibonacci retracement line after dropping from its local high. According to Altcoin Sherpa’s analysis, the price has been consolidating at this level, which could be a potential support zone.
However, despite this apparent support, Sherpa remains cautious, advising traders to wait for a deeper pullback. Sherpa specifically points out the $110 level as a more attractive entry point for AAVE.
This level corresponds to the 0.5 Fibonacci retracement and aligns with the 200 EMA on the 4-hour chart, creating a strong confluence area for support. The convergence of these technical indicators suggests that $110 is a critical level to watch, offering a better risk/reward ratio for potential buyers.
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Significance of the 200 EMA and Volume Analysis
In technical analysis, the 200 EMA is a highly regarded indicator that frequently serves as dynamic support or resistance. In the case of AAVE, the 4-hour chart’s 200 EMA coincides with the $110 level, boosting its relevance as a possible buying zone.
Sherpa’s analysis highlights this confluence as a key factor in his strategy, suggesting that a further decline to this level would provide a more secure buying opportunity.
Additionally, the volume analysis provided in Sherpa’s tweet indicates varying levels of trading activity. Recent spikes in volume suggest increased market participation, but Sherpa warns that this may be driven by speculative buying, influenced by increased shilling on social media platforms.
Overall, Altcoin Sherpa advises being patient and cautious. He highlights the significance of holding off until the $110 mark, where a firmer support level is provided by the intersection of the 200 EMA and the 0.5 Fibonacci retracement.
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