AAVE prepares for the back-test

After a sharp decline, AAVE formed a textbook spring, signaling that strong buying demand has returned to the market.

The recent bullish leg appears to have completed a 5-wave impulse structure (H4 timeframe), suggesting a high probability that a corrective phase may follow.

Currently, AAVE is testing the resistance boundary of its ascending channel. I’m looking for signs of an upthrust here, with two primary scenarios in mind:
Scenario 1: If the recent surge to $300 is confirmed as an upthrust, we could see a mild correction back to the $279 area for a support back-test—possibly forming a secondary spring within the rising channel (lower probability).
Scenario 2: If price wicks above $300 but then reverses, I anticipate a back-test at $289, which could set the stage for a new rally to break ATHs (targeting $325) and potentially reach the $370 area.

RSI is approaching overbought territory, but there’s no clear sign of a reversal yet. It’s crucial to watch for divergence signals at this stage.

Key Points:

AAVE is in a strong bullish phase, but a short-term pullback to retest the $279–$289 support zone could offer the optimal entry for the next leg up.

Risk management first: Keep stops tight below $275 to protect capital.

Lupinut

Also on:

Disclaimer

The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.

Lupinut

Also on: