AAVE, the native token of the Aave lending protocol, saw its price increase 1.21% over the past 24 hours to $57.77 according to the market data. With a market capitalization of $849 million, AAVE currently ranks as the 43rd largest cryptocurrency by market cap.
In this technical analysis, we will explore the key metrics around AAVE's price action over the past day, week, month and 6 months. We will identify trends, support and resistance levels, and make a prediction on what could happen to the price of AAVE over the next year.
Summarizing the Recent Price Action
Over the past 24 hours, AAVE has seen moderate buying pressure with its price increasing 1.21% from $57.05 to $57.77. Trading volume over the past 24 hours was $54 million, which is considered average compared to recent weeks.
Zooming out, AAVE remains in a clear downtrend over the past month, decreasing 22.06%. Over the past 6 months, AAVE has lost over 25% of its value amidst the broader cryptocurrency bear market.
However, over the past week, AAVE has staged a slight recovery, gaining 4.04%. This could suggest the selloff is slowing down and AAVE could be bottoming out around the $50 level.
Key Support and Resistance Levels
Looking at the price chart, we can identify some key support and resistance levels that traders should watch closely.
Strong support exists around $50, which has held up multiple times over the past few months. Below this, the next support level sits around $40.
On the upside, resistance is seen around $65, which stalled rallies multiple times in 2022. Above that, resistance sits around $75 which marked the 2022 highs.
AAVE will need to break out above these resistance levels convincingly before any sustainable uptrend can take place.
Moving Average Crossovers Signal Mixed Trend
Analyzing the moving averages shows mixed signals for AAVE's trend. The 50-day moving average recently crossed below the 200-day MA, known as the "death cross" which is traditionally a bearish signal.
However, the 20-day MA remains above the 200-day MA, keeping the short-term trend still in bullish mode for now. Traders will want to see the 20-day MA hold above the 200-day MA support to keep the near-term recovery intact.
Oscillator Readings Suggest Oversold Bounce
Looking at technical oscillators like the Relative Strength Index (RSI) and Stochastic RSI, they are starting to rise from oversold levels below 30. This suggests the recent bounce could have more room to run as excessive seller exhaustion takes place.
If the oscillators can break above 50, it would strengthen the case for a continued relief rally for AAVE, potentially up to resistance around $65. However, if they roll over and begin heading lower again, it's a sign the bounce was merely a short-term bear market rally.
Prediction: Range-Bound Chop Ahead Before Breakout In 2024
Analyzing both the longer-term and shorter-term metrics, my prediction is that AAVE will trade range-bound between support at $50 and resistance at $65 for the rest of 2023. This could last for several more months as the cryptocurrency market digests the 2022 crash.
However, looking out towards 2024, I believe AAVE will eventually break out above the $65 level and attempt to retest the all-time highs near $100.
The fundamentals remain strong for AAVE and lending protocols will continue to see high utilization. As the crypto market sentiment improves, traders will rotate back into altcoins like AAVE fueling a broader rally.
Patience will be key, but the technicals suggest AAVE is setting up for a major trend change sometime in 2024 after a period of consolidation.
What are the best trading indicators to use for AAVE?
When trading AAVE, some of the best technical indicators to utilize are moving averages, Bollinger Bands, and volume.
The moving averages identify the overall trend direction and potential areas of support and resistance. Bollinger Bands add upper and lower boundaries to the price action showing overbought or oversold levels. Volume confirms whether a price move has strength behind it or not.
Using these indicators together provides a complete picture of AAVE's trend, momentum, and ideal entry/exit points for trades. Pay close attention when the price approaches the moving averages or tests the Bollinger Bands, then confirm with above average volume for the best trade setups.
Is AAVE a good long-term investment?
AAVE remains one of the top decentralized finance (DeFi) protocols in the cryptocurrency ecosystem. It offers a valuable lending and borrowing utility within crypto. This gives AAVE technology a strong fundamental use case that is likely to continue growing.
Additionally, as a Proof-of-Stake blockchain, AAVE offers staking rewards for holding the token which enhances its investment value.
While AAVE's price has dropped significantly in 2022 with the rest of the crypto market, its strong fundamentals and staking yields make it an attractive long-term investment once the bear market ends.
As adoption of DeFi grows, AAVE is well positioned to capture value and see its token appreciate substantially in the years ahead. Therefore, AAVE can be considered a good long-term investment at current prices for investors with a multi-year time horizon.
In summary, AAVE looks to be consolidating after a rough 2022 but technicals point to a trend reversal setting up for 2024. The key will be breaking above resistance levels around $65 with conviction.
Using indicators like moving averages, Bollinger Bands and oscillators, traders can identify optimal entry and exit points. Long-term investors should stick with AAVE as it remains one of the top DeFi protocols with strong fundamentals.