AAVE analysis: decentralized finance nugget ready to go?

The cryptocurrency AAVE, along with its Dapp (decentralized application) of the same name, is one of the largest DeFi protocols. In fact, with its 15 billion TVL (Total Locked Value), this sector giant, which is more multi-chain, obviously has a bright future ahead. But does this potential emerge under the scrutiny of technical analysis of price charts? Let’s see it together today!

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AAVE / Bitcoin: an area of ​​uncertainty

The AAVE had a nice rally during the alt season that started in early 2021. In fact, the price of the cryptocurrency went from 0.0025 BTC in December 2020 to an ATH of around 0.016 in May, which represents an increase. 461%.

The cryptocurrency then severely corrected during the May crash, to find support at 0.005 BTC, which held through October, only to begin a slow and painful decline. This support has been retested, as resistance, so it is an important point to keep in mind.

We also had a buy reaction, in an area that served as resistance and support late last year: 0.0033. If buyers regain control here, a target of 0.0057 would seem consistent to me.

If this support breaks, the next support will be 0.0025, which has already reacted several times, so it seems relevant to me to wait for a reaction if we go back to it.

AAVE / USD: long-standing support

AAVE / USD technical analysis

AAVE is currently trading in a range, in which I would define $ 450 as the upper limit, $ 310 as the mid-range (the mid-range is always to watch), and $ 150 as the low limit.

In my opinion, the invalidation is pretty clear: a net cross of $ 150 to the downside (a daily close).

Be careful not to just scratch stakeholder liquidity below the lower limit before you roll back, that would be a strong enough buy signal. Whales and other strong hands in the market like to use our stop loss limits to be able to buy large volumes without having a significant impact on the market.

Zoom in for more precision.

AAVE / USD technical analysis in detail

As we get closer, we can see a price that the AAVE has already reacted a lot to, $ 220. So I expect a reaction there. In the short term, a range between $ 220 and $ 160 seems consistent to me, it remains to be seen if the exit will be up or down. As stated before, currently the override is very clear and could offer a good opportunity.

AAVE is an asset that seems very undervalued to me, in terms of fundamentals or technical analysis. The strict invalidation zone, which I have talked about a lot, presents an ideal zone to place a Stop Loss and you should not deviate from it at all if you are in a trading logic. For an investment approach, these prices also seem to me suitable for the implementation of a DCA (Dollar Cost Average) strategy in order to smooth the entry, while maintaining liquidity in case the AAVE rises.

As I like to point out, because it is an often overlooked point, your risk management must be strict and your business plan must be defined in advance, and you must not deviate from it.

I wish you all an excellent trade!

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