Aave price analysis: Could the rally continue to $200?

Aave may continue its recovery in the short term

Aave’s native token, AAVE, has been in a relief rally for the past few days. The bulls are attempting to build upon the recent gains as of 31 May 2022.

The Terra ecosystem collapse and the overall negative sentiment in the crypto sector have led to a sharp drop in total value locked (TVL) across several protocols. After the shake-up, Aave has become the second-biggest DApp, with $8.92bn in TVL, trailing MakerDAO, which has $10.06bn in TVL, according to Defi Llama data.

Another positive news was the launch of Aave’s social media platform, Lens Protocol, which went live on the Polygon blockchain mainnet on 18 May. The platform facilitates building decentralised social media networks where the data remains in control of the user in the form of non-fungible tokens (NFTs) within a crypto wallet.

Aave founder Stani Kulechov, speaking at the Permissionless crypto event on 18 May, said: “We believe that the ownership of content and profiles should belong to you in the way that DeFi belongs to you,” CoinDesk reported.

Could the fundamental developments help sustain buying interest at higher levels? Could Aave go up? Read the AAVE price analysis to find out.

Aave weekly chart
Aave weekly chart – Credit: Currency.com

Aave price technical analysis: weekly chart

AAVE’s price formed a Doji candlestick pattern for the past two consecutive weeks, indicating that the selling pressure was reducing. The uncertainty resolved in favour of the buyers as the price rose above $110.

The bulls are attempting to push the price to the 20-week exponential moving average (EMA) where the bears may again mount a strong defence. If the price turns down from this level, it will suggest that the sentiment remains negative and traders are selling on rallies.

On the other hand, if buyers push the price above the 20-week EMA, it will suggest a potential change in trend. The AAVE/USD pair could then rise to the 50-week simple moving average (SMA). The bulls may find it difficult to clear the overhead resistance zone between the 50-week SMA and $260.

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Aave daily chart
Aave daily chart – Credit: Currency.com

Aave price technical analysis: daily chart

AAVE’s price hit a short-term bottom on 12 May at $63. Since then, the pair started a relief rally which stalled at the 20-day EMA on 25 May. But a positive sign is that the bulls did not give up much ground. Buying renewed on 30 May and the bulls pushed the price above the 20-day EMA. 

The relative strength index (RSI) has risen into positive territory and the 20-day EMA has started to turn up, suggesting a minor advantage to buyers.

The bears may attempt to stall the up-move at the 50-day SMA but if buyers do not give up much ground, the prospects of a break above the overhead resistance increases. If that happens, the bullish momentum may pick up and the pair may soar to the psychological level of $200.

This bullish view will be invalidated in the short term if the price turns down and plummets below $89.

Aave: Buy or sell this week?

Aave’s price has risen above the 20-day EMA, which is the first sign of a potential change in trend. If bulls sustain the momentum and overcome the barrier at the 50-day SMA, Aave’s price analysis suggests the next stop could be $200. On the contrary, if the price turns down from the 50-day SMA, the pair could drop to the 20-day EMA, which is likely to act as a support.

The views and opinions expressed in the article are those of the author and do not constitute trading advice. Trading and investing involve substantial risks and you should do your own research or contact your financial adviser before arriving at a decision. 

AAVE to US Dollar
Daily change
Low: 83.465
High: 86.914

Further reading

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