Disclaimer: The information presented does not constitute financial, investment, trading or any other type of advice and is solely the opinion of the writer.

Bitcoin and Ethereum continued to record losses on the price charts. Respectively, the two crypto giants have lost 7% and 11% in the past 12 hours. Aave also suffered losses in recent trading hours, despite rising above the USD 64.8 resistance level.

The charts suggested that a bearish move for AAVE may be in the works. A key near-term support level came under pressure from sellers. It remains to be seen whether the buyers can fend off the bears.

AAVE- 4-Hour Chart

Source: AAVE/USDT on TradingView

The Fibonacci retracement levels (yellow) are plotted based on AAVE’s decline from $162.2 to $64.8. At the end of May, the price rose towards the 61.8% retracement level at $125. However, this rally ground to a halt and the price reversed.

At the time of writing, the market structure pointed to further losses for AAVE. The $69.2 level is a significant long-term horizontal level. In recent days, this level has been retested as resistance, and AAVE has faced rejection and downward movement.

The 23.6% extension level is at $41.8 and represented an area where support was seen.

Aave- 1 Hour Chart

Source: AAVE/USDT on TradingView

The hourly chart highlighted that the market structure was a little more complicated than just bearish. In H1, the price broke the bearish structure and turned to bullish as it climbed above $64.8. This level was a lower high on the downtrend, and AAVE climbing past it marked a bullish break.

However, in recent days, the $58.2 (dotted green) level has been a key support level. At the same time, the $55 level (dotted white) was the higher low that AAVE formed before moving past $64.8.

Therefore, if AAVE falls below $55 in the next few hours, a retest of the $58 (cyan frame) area would likely present a chance of a short.

Source: AAVE/USDT on TradingView

The RSI fell back below the neutral 50 line to indicate bears were on the rise again. However, the OBV was well above a local resistance level. The Stochastic RSI was also in oversold territory.

On their own, the OBV and the Stochastic RSI don’t show a good chance of a bounce out of the demand zone at $58. Still, they don’t support a bearish notion of a lower time frame either.

Conclusion

It would probably take a few more hours for this trading idea to materialize. The market should show its bearish bias on a lower time frame by moving below the USD 55 level. After that, a bearish retest of the $58 zone from below may present opportunities for short positions.

The next move down could likely reach the 23.6% extension level at $41.8. A stop-loss may be set just above USD 60 as the USD 58 zone is expected to act as a resistance.



This post AAVE: A bearish retest of this zone could present opportunities for short circuit

was published first on https://ambcrypto.com/aave-a-bearish-retest-of-this-zone-could-present-shorting-opportunities/

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