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With a bear cycle in the 4-hour chart, AAVE reveals potential drop chances to $115. Will buyers reverse the trend?
Amid a bear market, the volatility in the AAVE token price is increasing, and the DeFi token gives sharp moves this week. With a weekly price range of more than 10%, it fluctuates within a broadening wedge.
Will buyers manage a breakout rally as the whale’s buying spree picks up pace?
AAVE Bull’s Trapped in a Megaphone
With a market cap of almost $2 billion, the Aave token is trading at $130.07 with a 24-hour jump of 4.35%. However, in the 4-hour chart, the Aave token shows a broadening wedge or a rise megaphone pattern with constant support at $115.
Despite the solid support, the bullish power struggles to surpass an overhead ascending trend line, leading to a stunted higher-high formation. The Aave price action reveals a higher price rejection near the overhead trend line. Thus, this results in an evening star pattern that breaks below the 23.60% Fibonacci level at $129.91.
The crucial EMAs 50 and 200 in the 4-hour chart maintain a slightly bullish trend ready to provide dynamic support. The 200 EMA provides crucial support at $115.
The MACD indicator shows a positive trend in the MACD and signal line, but a downtick warns of a bearish crossover as the negative cycle within the megaphone pattern begins.
Founder Sell-off Meets Whale’s Buying Spree
The negative cycle correlates with the Aave founder, Stani Kulechov, selling off $6 million worth of Aave and continuing to hold $32.7 million worth of Aave tokens, which comes to about 243,900 Aave tokens.
However, as the founder loses confidence, the Aave community grows on a buying spree. Two Aave whales have bought up $2.2 million worth of Aave tokens in the past two hours.
Will AAVE Give A Breakout Rally?
With the growing confidence and the ongoing uptrend for the past few months, the Aave will likely surpass the overhead trend line and nullify the bearish pattern. Based on the Fibonacci levels, the overhead resistances are 38.20% and 50% at $138 and $145.
On the flip side, the dynamic support at $125 of 50 EMA and the 200 EMA at $116 near the $115 support zone remain critical demand levels. A breakdown below $115 could test the psychological mark of $100.