With sell pressure rising, can AAVE still head back to $128?

Saif Naqvi
Source: Pixabay

Following the disastrous sell-off in the crypto market last week, a few alts were reclaiming their values on the chart. DeFi lending platform AAVE was on a similar growth trajectory. However, external factors suggested that the recovery could be short-lived, with sellers gearing to force the next correctional round.

Source: TradingView

Since hitting its lowest point in nearly two years on 12 May, AAVE’s price moved upwards as bulls initiated a recovery from $64-support. The price made a chain of higher lows and sat within an ascending triangle on the hourly chart – a technical pattern that often triggers breakouts leading to more price growth.

However, the technical position on the chart is only half the narrative. On the flip side, the most popular indicators – the Relative Strength Index and the MACD, showed that the buying pressure gradually easing. At press time, the RSI held around 50 after slipping lower on Wednesday morning. Meanwhile, the MACD used to gauge market trends, also held flat around its mid-point – These signs were not ideal for an AAVE breakout.

Source: IntoTheBlock

Looking at exchange data, the bias was already shifting gear. Several sell trades were placed on exchanges in the past 12 hours, with a minimal counter-response from buyers.

Source: IntoTheBlock

If the current trend continues over the next 24-48 hours, the sell-off could be severe. Data from IntoTheBlock showed that 85% of the addresses that bought AAVE after last week’s decline were currently in profit. These addresses might be tempted to cash out and avoid taking more hits on their investment as the broader crypto remains sketchy.

AAVE Hourly Chart

Source: TradingView

Judging by the height of the triangle, AAVE projected a 34% upswing back to the $128-mark. However, after looking at exchange data, AAVE seemed to lack the momentum required to meet its breakout target.

On the other hand, a downside move could follow if sellers continue to apply more pressure. Hence, investors are cautious of a daily close below $85. The same could drag AAVE back to 12 May’s swing low of $62, marking a 26% decline.

However, there is light at the end of the tunnel. The altcoin market is currently heavily reliant on Bitcoins’ cues and a BTC rally could end up saving AAVE from the forecasted decline.