Aave was down 13.34% last week. The governance conflict in the DeFi protocol ecosystem remained a sore point.
Token prices have fallen in recent days amid the ongoing battle between Aave Labs and the DAO over fee revenue.
Price action suggests a brief rebound is possible, but a recovery may not happen anytime soon.
Evaluating the price trend over a higher period
Source: AAVE/USDT on TradingView
The 3-day chart shows the persistent downtrend of Aave (AAVE) over the past few months. The old range lows at $220 failed to hold during the October sell-off and were retested as resistance in early November.
At the time of writing, the structure remains bearish on this maturity. An imbalance (white) around the $160 resistance zone was another notable area where bears could take control of the price action.
To make the D3 structure bullish, altcoin prices must surpass the local high of $207.1.
Source: AAVE/USDT on TradingView
The 4-hour chart also shows a bearish structure. Although AAVE rebounded from the local low of $146.4 to reach $155 at the time of writing, the swing structure remained bearish. On the other hand, the MACD moved closer to zero to reflect the slowing downside momentum.
The CMF rose above +0.05 to show significant buying pressure in the market. This could lead to a rebound towards key resistances.
The Fibonacci retracement levels at $171.85 and $187.58 confluence with the imbalance on this time frame between $166 and $175.
Where will Aave move next?
It is possible that growing demand and a recovery in Bitcoin (BTC) above $90,000 and $94.5,000 could temporarily revive the altcoin markets. In this scenario, a price rebound beyond $187 to reverse the downtrend is possible.
This outcome remains unlikely.
Trader Call to Action – Wait for a Bounce to Go Short
Infighting within the protocol was undermining trust in the token. As one of the leading names in DeFi, it appears the fundamentals remain strong despite price volatility.
Given the longer-term price trend, as well as the uncertainty around Aave, traders can take advantage of a price rebound to key resistance levels to sell the token.
The $167-$178 area would provide short selling opportunities for traders. A move above $187 would invalidate the idea and signal a potential trend reversal.
Final Thoughts
- The dispute over Aave’s fee revenue shook investor confidence in the token, but the protocol’s fundamentals remained stable.
- AAVE investors and traders should be wary of price rebounds and treat the market as dominated by bears.
Disclaimer: The information presented does not constitute financial, investment, business or other advice and represents the opinion of the author only.
