Analysis
AAVE: Can this range-low offer traders a buying opportunity?
AAVE hit a crucial demand and confluence zone which could present buying opportunity, but …
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion
- AAVE’s price action retraced to a crucial demand zone.
- However, the futures market sentiment remained in a bearish territory.
The uncertainty around Bitcoin [BTC] has exposed most altcoins to bears’ wrath. AAVE sustained sell pressure in mid-July, dropping from a new Q3 high of $88. But AAVE entered a price consolidation between $69 – $76, cushioning it from extra losses.
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In the meantime, BTC was yet to reclaim the previous range-low of $29.5k. However, this week, a clearer direction could be set as the market focuses away from last week’s Fed decision.
Will the range-low hold?
Source: AAVE/USDT on TradingView
At the time of writing, AAVE retested the range-low area near $68.95. It is worth noting that the area is a confluence of many levels. It was also previous support in early Q2, especially in April and early May.
In addition, the above confluence area also aligns with a daily chart bullish order block (OB) of $66.5 – $70.7 (cyan). So, bulls could see respite at the zone, allowing them to re-target the range-high of $75.76, especially if BTC doesn’t record further losses in the coming hours/days.
If so, buying at the confluence area could offer a good risk ratio, with the immediate target at the range-high ($75.76).
An extended drop below the confluence area, <$68, will invalidate the above bullish idea.
However, price chart indicators flashed negative at the time of writing. The Relative Strength Index (RSI) was below the neutral level, while Chaikin Money Flow (CMF) was below zero, demonstrating muted demand and capital inflows. It calls for caution before considering the above bullish set-up.
Demand dipped in the futures market
Source: Coinalyze
The futures market also recorded muted demand at the time of writing. Buying volumes declined and reinforced sellers’ conviction, as illustrated by the negative Cumulative Volume Delta (CVD) slope.
How much are 1,10,100 AAVEs worth today?
Since 27 July, the Open Interest (OI) rate has fluctuated below $50 million, reinforcing the wavering demand in the futures market. As such, the described bullish idea could be risky unless BTC reclaims $29.5k and surges upwards.
