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AAVE drops to $76 support level: Are short-sellers’ gains limited

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AAVE drops to $76 support level: Are short-sellers' gains limited

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Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.

  • AAVE hit the price ceiling near $82.
  • But the retracement has hit an area of confluence, including the 50 MA and 200 EMA. 

Aave [AAVE] attempted a successful recovery but hit a key price ceiling and sell pressure zone of $80-$82. Nevertheless, the retracement has also hit a crucial confluence area of support that may undermine short-sellers, especially if Bitcoin [BTC] drops below $28k. 


Read Aave’s [AAVE] Price Prediction 2023-24


Recently, AAVE revealed an expansion plan, with BNB Chain as the next likely destination for AAVE v3. Despite the potential good news for bulls, BTC’s fluctuations near $28k could also determine AAVE’s price action over the next week. 

Will the confluence area prevent further drops?

Source: AAVE/USDT on TradingView

The $80 – $82 zone has been a persistent supply zone since mid-March, both in the lower and higher timeframe charts. From 27 March, the bulls secured $68.8 and rallied 18% but were blocked by the supply zone. AAVE had retraced by over 5% at press time and traded at $76.4. 

Meanwhile, Bitcoin struggled to keep above $28k. A drop below $28k could tip sink AAVE below the confluence of the 50 MA, 200 EMA and the $76 support level. But short-sellers may only gain leverage if they sink AAVE below the descending line and $75. 

Alternatively, near-term bulls could be hopeful if they defended the confluence area. The next likely target if the $76 support is defended is the supply zone of $80 – $82. If AAVE overcomes the selling pressure, the next resistance levels lie at $83 and $85. 

At the time of writing, the RSI (Relative Strength Index) retreated from the overbought zone and was below 50, indicating a drop in buying pressure in the past few days. Similarly, the OBV (On Balance Volume) dipped, showing that the demand for the token dropped slightly in the same period.

Mean coin age increased despite the declining trading volume

Source: Santiment

The mean coin age has consistently risen in the past few days, indicating that there has been a wide accumulation of AAVE tokens in the past few days, and a likely rally could occur. 


Is your portfolio green? Check AAVE Profit Calculator


While this might be good news for bulls, the declining trading volumes, as seen by the drop in hourly active addresses, could tip the scale in favor of sellers. 

However, sentiment remained positive and improved slightly at press time. But investors should track BTC’s price action for better trades. 

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Saman Waris works as a News Editor at AMBCrypto. She has always been fascinated by how the tides of finance and technology shape communities across demographics. Cryptocurrencies are of particular interest to Saman, with much of her writing centered around understanding how ideas like Momentum and Greater Fool theories apply to altcoins, specifically, memecoins. A graduate in history, Saman worked the sports beat before diving into crypto. Prior to joining AMBCrypto 2 years ago, Saman was a News Editor at Sportskeeda. This was preceded by her stint as Editor-in-Chief at EssentiallySports.
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