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Bitcoin and Ethereum continued to post losses on the price charts. Respectively, the two crypto giants shed 7% and 11% within the past 12 hours. Aave also suffered losses in recent hours of trading, despite seeing a surge above the $64.8 resistance level.
The charts suggested a bearish move for AAVE could be in the making. An important short-term support level was under challenge from the sellers. It remains to be seen if the buyers can fend off the bears.
AAVE- 4-Hour Chart
The Fibonacci retracement levels (yellow) were plotted based on AAVE’s drop from $162.2 to $64.8. In late May, the price rose to the 61.8% retracement level at $125. However, this rally was halted in its tracks, and the price reversed.
At the time of writing, the market structure pointed toward further losses for AAVE. The $69.2 level is a long-term significant horizontal level. In the past couple of days, this level was retested as resistance, and AAVE faced rejection and a move downward.
The 23.6% extension level lies at $41.8 and represented an area where support could be seen.
Aave- 1 Hour Chart
The hourly chart highlighted that the market structure was a bit more complicated than simply bearish. On H1, the price broke the bearish structure and flipped to bullish when it rose past $64.8. This level was a lower high on the downtrend, and AAVE climbing past it highlighted a bullish break.
However, in the past few days, the $58.2 level (dotted green) has been an important support level. At the same time, the $55 level (dotted white) was the higher low that AAVE formed before pushing past $64.8.
Therefore, if AAVE moves beneath $55 in the coming hours, a retest of the $58 area (cyan box) would likely present a shorting opportunity.
The RSI fell back beneath the neutral 50 line to indicate that bears were in the ascendancy once again. However, the OBV was well above a local resistance level. The Stochastic RSI was also in the oversold territory.
By themselves, the OBV and the Stochastic RSI do not show a good chance of a bounce from the demand zone at $58. Yet, they do not support a lower timeframe bearish notion either.
A few more hours would likely be needed for this trade idea to materialize. The market would need to show its lower timeframe bearish bias by moving beneath the $55 level. Thereafter, a bearish retest of the $58 zone from below could present shorting opportunities.
The next move down could likely reach the 23.6% extension level at $41.8. A stop-loss can be set just above the $60 mark, as the $58 zone is expected to act as resistance.
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