AAVE could rally to a new all-time high near $350 if bulls hold above $260
Aave has traded within a broader ascending triangle pattern over the past few days, after sellers reacted swiftly to AAVE/USD hitting a new all-time high. Although bears could sink prices towards key support areas, Aave’s technical picture suggests a breakout to a new ATH is possible in the short-term.
AAVE has broken lower after touching a new all-time high of $292, with prices correcting to lows of $265 in the past 24 hours.
Currently, AAVE/USD is trading near the middle trendline of what appears to be an ascending parallel channel. If bears push lower, prices are likely to drop to the 0.236 Fibonacci retracement level of the move from $151 low to $292 high. It would mean a continuation of the decline to price levels around $259.
The area, however, has robust support levels that have provided a bounce-off to prices near $288. The lower boundary of the channel pattern, the 20-SMA, and the support line of a rising trendline all confluence around the $250—$257 zone.
AAVE/USD 4-hour price chart. Source: TradingView
The 4-hour chart shows that bulls still have the upper hand as the RSI is trending with a bullish divergence above 60. The moving average curves are also rising, while sell-side volume has shrunk considerably.
A bull pennant pattern has also formed on the hourly chart of the AAVE/USD pair to suggest its price is likely to break higher. By measuring the height of the flagpole, we can determine how high the breakout is likely to be. AAVE’s price could thus rally by 20% or more after a bullish breakout to $323. The target from here will be the $350 level.
AAVE/USD hourly price chart. Source: TradingView
On the downside, the RSI is close to the 50 point level and could dip to hand bears an added advantage. We could thus see AAVE drop below the descending triangle pattern formed over the past few hours. If this happens, the decline could extend past the 0.5 Fibonacci level ($264) of the bounce from $240 low to $288 high.
If these levels do not hold, bulls can rely on the 50-SMA ($261) and the 0.618 Fibonacci level ($258). A horizontal support line provides further support at $240, with the 0.5 ($221) and 0.618 ($205) Fibonacci retracement levels of the move from $151 low to $292 high also serving as possible anchors.