- Failed breakout was met with heightened selling that forced AAVE back below the $280-mark
- There may be a chance that the price would drop to $240 in the coming week
Aave [AAVE], at the time of writing, had managed to break out past the critical resistance at $280, contrary to previous expectations. In fact, over the past week, Bitcoin’s [BTC] price rejection at $110k saw AAVE wipe out a good chunk of its recent gains.
The altcoin seemed to have bullish momentum, but a move to the $260 and $240 support levels may also be possible.
AAVE’s price action signals long-term bullishness
Source: AAVE/USDT on TradingView
The weekly chart highlighted the rapid rally last November and the almost equally swift decline in Q1 2025. This downtrend took the altcoin’s price back to the $125 low from before the rally. This meant 100% of the gains had been wiped out – Not good news for long-term investors.
Therefore, the weekly chart underlined the potential range formation between $125 and $380-$400 in the coming months. As the mid-point of a potential range, the 50% level at $262 has been a key resistance over the past month.
The altcoin appeared to break out cleanly earlier this week. It surged from $253 on Monday to reach $325 on Wednesday, a 28% rally, before falling to $275 before the week ended.
A weekly session close above $280 would be a positive sign for the coming week. The OBV has been trending higher since April – An encouraging factor for AAVE bulls.
Source: AAVE/USDT on TradingView
The range formation (white) was clearer on the 1-day chart. Reaching from $240 to $280, it retested the $260 mid-point support on Friday. The breakout last Monday and Tuesday morphed into a retracement back into the range.
The trading volume has been high over the past few days, when the price was falling too. This could be a clue of heavy selling volume and bearish dominance, a clue that the OBV confirmed. The volume indicator made new lows compared to the past three weeks.
Despite the retracement into the range, all hope was not lost though. The structure of AAVE was still bearish. However, the 20 and 50 DMAs signaled bullish momentum and should serve as dynamic support levels upon a retest, especially the 50 DMA.
Hence, investors can wait for a drop to $240 to buy more AAVE. Confluence of the lower range extreme and the 50 DMA should rebuff the bearish attempts to continue the downtrend.
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion
