As a seasoned researcher with over two decades of experience in the cryptocurrency market, I have seen my fair share of bull runs and bear markets. The recent surge in AAVE price has certainly piqued my interest, especially considering its six-day rally and breakout from a two-year accumulation trend.
AAVE price surged 9% during the U.S. trading session on Monday, climbing among the top gainers according to Coinmarketcap. With a six-day rally, the altcoin breaks out of a two-year accumulation trend and retests at $180, a level last recorded in late April 2022. However, is the recovery sustainable?
Is AAVE Price Entering Overbought Territory After a 30% Weekly Rally?
Last week, the daily AAVE chart displayed an impressive price surge from $134 to $176, representing a significant 32% increase. This bullish surge, reinforced by substantial trading volume, successfully breached the long-standing resistance at $153. In essence, this breakout marked the culmination of a two-year accumulation phase for AAVE.
As a researcher, I’ve observed that the weekly time frame chart reveals the ongoing recovery is shaping up into a popular reversal pattern known as the Rounding Pattern. This pattern resembles a saucer shape, smoothly transitioning from a persistent downtrend to an accumulation phase and finally accelerating into a robust recovery stage.
If purchasing continues at its current pace, the price of AAVE may increase by approximately 12%, aiming to breach the significant resistance level at $200. Subsequently, a potential further surge could propel the price up to around $260.
Based on Santiment’s data, large AAVE wallets (holding between 1 million to 10 million AAVE) have been actively purchasing AAVE since early August 2024. These purchases have now amassed a total of $4.2 million worth of AAVE tokens. This substantial buildup might influence the market trends of AAVE, contributing to its continued recovery.
Conversely, the price of AAVE has deviated significantly from its swiftly changing 20-day and 50-day exponential moving averages, a state that’s usually indicative of volatility and often precedes a downward trend.
The strong increase in the Average Directional Index (ADX), reaching 35%, suggests that buyers might be nearing exhaustion and may struggle to maintain prices at elevated levels.
In addition, the 30-day MVRV ratio increased by 23%, indicating that at present, short-term traders are realizing profits. Notably, in the past, similar high levels have occurred alongside peaks in Aave’s price, suggesting a surge of speculative traders entering the market to seize short-term profits.
Consequently, since no patterns persisted, it’s likely that the AAVE price will experience a short-term dip to recharge its bullish energy before making its next significant rise.
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2024-09-24 00:16