AAVE: Can traders benefit from this recovery extension?
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion
- AAVE retested a July support of $68.
- Futures market demand has improved since mid-September.
The late September’s extended market recovery tipped Aave [AAVE] to hit the top two DeFi protocols as total value locked (TVL) improved. On the price performance front, AAVE’s second leg of recovery hit +20%, peaking at $72.4 before a slight pullback at press time.
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A week ago, AMBCrypto was bullish on AAVE after it retreated to $60 and projected it could hit $65. The projection was validated, and an extended recovery could happen if Bitcoin [BTC] surges further.
Will the recovery extend?
At press time, AAVE retested an invalidated daily bullish order block (OB) of $66.45 – $70.7 (red) and support zone in July. If BTC doesn’t post immediate losses, AAVE bulls could defend the support zone.
If so, the third leg of recovery from the July support could tip AAVE to hit $75 and $80 levels. Such an extended recovery could offer modest gains if AAVE is bought at the support level.
But a drop below the support zone will flip the higher timeframe market structure bearish. So, a drop below the $66.45 would invalidate the bullish bias. But a liquidity hunt below the support level couldn’t be overruled.
Meanwhile, the Relative Strength Index (RSI) and Chaikin Money Flow (CMF) were positive at press time, but the downticks meant that buying pressure and capital inflows eased slightly. Hence, tracking BTC movements is crucial for optimized set-ups.
AAVE’s demand recovered in September
According to Coinglass, AAVE’s Open Interest rates improved in the second half of September. It indicates that demand for AAVE recovered in the derivatives market over the same period and spiked in October.
How much are 1,10,100 AAVEs worth today?
However, the metric was down 8% at press time, indicating a building short-term bearish pressure. So, tracking BTC price action is key for risk mitigation.