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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
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
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.
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.
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/