As the broader market continued to witness outflows following Bitcoin descent to $59,000, AAVE too followed wider consensus. However, the alt’s sell-off was rather brutal when compared to some of its counterparts. The last 24 hours saw AAVE shed 15% of its value as five straight red candles lined up on its 4-hour chart.
To cushion its losses, much responsibility fell on the 61.8% Fibonacci level. This also coincided with the 200-SMA (green) and Visible Range POC. Should the region hold off an extended decline, AAVE will find a resting ground before a bullish rebound.
Barring a single candlewick that tagged the $458-mark, AAVE’s reaction to the broader market decline was quite severe. A sixth straight red candlewick was in formation on the 4-hour timeframe, a development which was last observed during 7 September’s flash crash.
With momentum riding behind the sellers, AAVE threatened another 5%-6% drawdown, before testing the strong support zone at the 61.8% Fibonacci level.
Now, the aforementioned Fibonacci level matched against selling pressure in early August and mid September. This time around, the 4-hour 200-SMA (green) and Visible Range’s POC helped form a support trifecta around the $300-mark. Ideally, this area will provide stability to AAVE’s downfall and help trigger a bullish reversal when the broader market turns risk-on again.
On the flip side, should the bears slice under this strong confluence, an additional 13% sell-off towards the 78.6% Fibonacci level will come to light.
AAVE’s indicators also backed further near-term weakness. The RSI pointed south from 44 and had more room to fall before touching the oversold zone. The MACD even flashed a sell-signal after recording a bearish crossover.
However, AAVE’s overall trend was not under threat, at press time. The Directional Movement Index’s +DI line maintained itself above the -DI, despite its convergence.
AAVE looked primed for an additional 5% drawdown in the coming sessions. From there, a support trifecta could aid in AAVE’s recovery and negate an extended decline. Traders can opt to long AAVE within the aforementioned support area and bag the alt at a discounted level.
However, stop-loss should be placed right below the $300-mark.
(function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[1]='MERGE1';ftypes[1]='text';fnames[0]='MERGE0';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true);
Article comments