Aave (AAVE/USD) Shows Bullish Signs but has yet to Recover From the Crash

Aave (AAVE/USD) Shows Bullish Signs but has yet to Recover From the Crash

Posted Tuesday, September 14, 2021 by
Eric Nkando • 2 min read

The cryptocurrency Aave has been consolidating since September 7, following the crypto flash crash.

Before the crash, AAVE/USD was unsuccessfully attempting to break past the 427.8 level, after a few days of consolidation. However, the crypto crash took it to the previous support at 315. Now, after failing to break below the support, AAVE/USD is showing some bullish signs, but where are the buyers?

AAVE/USD – A Technical Outlook

Aave (AAVE/USD) Shows Bullish Signs but has yet to Recover From the Crash

Aave Daily Chart Analysis

This daily chart of AAVE/USD gives a clear picture of the crypto trading in the last few days. It can be seen that several daily chart candles have formed around the support area since September 7, all failing to take prices higher. I consider the 315 area as strong support, as we can see that prices always surged higher after touching the level, or traded down after reaching it and failing to break past the level.

Possible Reasons  for AAVE/USD, Lack of Bullish Takeoff

Weaknesses in AAVE/USD can be connected to the broader crypto weaknesses since the September 7 crash. A spot-check of major cryptocurrencies shows that Bitcoin has gone down 13.90% in the last seven days, Ethereum is down 15.93, while Cardano has shed 15.11% in the same period. AAVE/USD lost 17.73% in the same period, although it is now up by 3.92% in the past 24 hours.

Besides, there is another twist on Aave. As of September 7, before the crypto crash, the total value locked (TVL) in the crypto token was $18.149 billion, which fell drastically following the crash, to reach $13.64 billion by September 9. 

At the time of writing, Aave’s TVL was $15.025 billion. This clearly shows that investors are getting back to Aave, albeit slowly, as the TVL is recovering to its prior levels.

AAVE/USD Trade Idea

There is another bullish sign for AAVE/USD. Looking at the daily chart, a bullish pin bar can be seen towering above the support area. I interpret the bullish pin bar as an attempt by the crypto token to surge higher. Thus, I will look to buy from the current formation of the pin bar at the support level.

But, it is important to also look at the 4-hour chart before making buy entries.

AAVE/USD – A Technical Outlook

Aave (AAVE/USD) Shows Bullish Signs but has yet to Recover From the Crash

Aave 4-hour Chart Analysis

From the 4-hour chart, we can see that a minor resistance is trapping AAVE/USD at 349.5.  Prices could continue to consolidate until the minor resistance level is broken. Remember, the breakout could happen to the upper or lower side, depending on the overall sentiment on cryptocurrencies or the developments in Aave.

I will wait until I see a sufficient breakout past the 349.5 resistance for my buy trade confirmations. Also, I will monitor the TVL flows on Aave, as it has been shown to move with the price. Good luck!

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