In the intraday session, AAVE converted $58.1 into support when Bitcoin [BTC] switched resistance at $16.5K into support.
At the time of publication, AAVE was trading at $59.5, up nearly 3% in the previous 24 hours. The king coin gained as well, positioning AAVE for a possible breakthrough from its 2-week bearish pennant pattern.
Given the unfolding story about the impact of Genesis’s FTX exposure, any bearish BTC sentiment will push AAVE below the $57-support level.
AAVE chalks a bearish pennant – A bloodbath in waiting?
Source: AAVE/USDT, TradingView
The recent market crash caused AAVE to fall from its November ATH at $98. The recent rallies ended with lower highs with the same lower lows, resulting in a bearish pennant pattern. Bearish pennant patterns are trend continuation patterns so, a further drop in AAVE prices is likely in the next few days.
The RSI has been moving sideways after retreating from the oversold territory. This suggests that the sellers are still in control, despite easing selling pressure. In addition, the On Balance Volume (OBV) hasn’t crossed the October threshold, indicating that AAVE is yet to record solid bullish recovery.
As a result, the bearish flag pattern could facilitate a trend continuation. The sellers may push AAVE lower. If sentiment on BTC also turns bearish, AAVE could fall further. Sellers can expect new support levels at $49.6 and $48.2.
However, a session close above $64.1 will invalidate the bearish inclination.
A confirmed breakout on the upside would allow entry into a long position with $70.7 as the primary target. The bearish order block at $86.1 and the 0.236 Fib level ($64.1) may also be secondary targets.
Holders suffer losses despite improved sentiment
Source: Santiment
An analysis of Santiment’s data revealed that AAVE enjoyed positive weighted sentiment at press time.
However, positive sentiment is still insufficient to protect AAVE holders from losses. The 30-day market value to realized value ratio (MVRV) remained in negative territory. This shows that short-term AAVE holders are still suffering losses since the market collapse on 8 November.
AAVE investors should therefore monitor the king coin’s sentiment before making any move on the possible patterned breakout.
