AAVE drops to $76 support level: Are short-sellers’ gains limited
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
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.
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,
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