AAVE/USDT looking to break out of bearish triangle structure to chart further upsides
Bullish pressure could lead the DeFi lending asset to a critical Fibonacci retracement level
JAIPUR (Coinchapter.com) – Aave is leading the decentralized finance (DeFi) protocol leaderboards at the moment in terms of growth. But its native blockchain asset, AAVE, too, is riding high on market gains. In a rally that began during the late noon hours of the previous London trading session, the DeFi cryptocurrency logged near 20% gains.
With the upside move, the AAVE/USDT rate invalidated the bearish triangle technical setup, which restricted its price action till Sunday, July 25. As a result, buying pressure is intense and indicates further upside for the DeFi crypto asset.
The AAVE/USDT has broken above the upper bound of the bearish triangle on the daily chart. In doing so, the spot pair is on the verge of retesting the $342.62 price level. The same coincides with the 50% Fibonacci retracement level.
Fibonacci retracement helps forecast the near-term support and resistance levels for any asset. The technical analysis tool is derived from Fibonacci numbers. It is a mathematical number system propounded by the erstwhile Italian mathematician of the same name. Fibonacci numbers, in turn, attribute their origins to the Golden Ratio. It is a number that defines the aesthetics of everything that we see around us.
One needs to consider the highest and the lowest spot price of an asset (during uptrend/downtrend) to calculate Fibonacci retracement levels. In AAVE’s case, the lowest point of the uptrend coincides with the November 2020 lows of $27.22. Conversely, the highest point coincides with the all-time high of $658.03 that the AAVE/USDT pair achieved before the May dump.
Between $27.22 and $658.03, the Fibonacci indicator has worked out the critical retracement levels. The 38.2%, 50%, and 61.8% retracement levels provide vital insights for AAVE’s future price action (and for any other financial asset as well). And can help traders/ investors decide their entry and exit points. Why? Because the Golden Ratio is appropriately calculated in these three percentages.
For AAVE/USDT, the ongoing bullish pressure hints at the restest of the $417.06. The price level is approximately 25% upside from current prices and coincides with the 38.2% Fibonacci retracement level. This setup stands to play out only if bulls manage to close above $342.62, which coincides with the 50% Fibonacci retracement level.
AAVE risks dropping to support at $268.19 (61.8% retracement level) if bulls run out of steam and sellers take over.
Himadri is an active investor in cryptocurrencies and upcoming blockchain technology projects. He has been a part of the digital asset space since 2017 and has held multiple positions as Social Media Manager, Assistant Editor, Sponsored Content Manager, Cryptocurrency Journalist roles in reputed news outlets like NewsBTC, Bitcoinist and CryptoPotato. He has also helped numerous blockchain projects gain prominence through terse and succinct marketing/technical content. Himadri comes with a marketing and engineering background, and has worked with reputed names such as GE Healthcare, Volvo Trucks and Polycom before moving into crypto.
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