AAVE price doubles in two weeks riding on bullish cues from V3 launch

MANALI (CoinChapter.com) — AAVE price continues its bull run as the token registered a nearly 100% rally from Mar 16’s low of $121.2 to reach an intraday high of $242.2 on Wednesday.

The launch of Aave’s V3 upgrade seems to be the fuel behind the token’s ongoing rally. V3 introduced cross-chain portals to help users transfer their digital assets to Aave Protocol versions on other networks. In addition, the platform also reduced gas costs for all Aave functions by roughly 25%.

Traders seem to be extremely bullish regarding AAVE price prospects. The crypto registered a 33.25% gain on Mar 29, bursting past $200 for the first time since Jan 20, 2022.

AAVE price continued moving upwards, but long wicks on both sides of the candle indicate that both bulls and bears are aggressively participating in trading. Meanwhile, the Aave token’s 20-day Moving Average (red wave) moved above its 50-day MA (yellow wave) to chart the golden cross’s bullish pattern.

A golden cross is a bullish technical signal that forms when a short-term MA line moves above a relatively long-term one. Traders and analysts usually interpret the pattern as an indicator of a definitive uptrend in the market.

Also Read: Aave token jumps over 15% in a day after launching V3 liquidity pool.

If AAVE price continues moving up, it would first flip resistance at $243.2 before targeting resistance near $256. Finally, the Aave token has resistance near $272.4, a price level that previously acted as resistance for AAVE from Nov 17, 2021, to Jan 4, 2022.

Meanwhile, momentum oscillator MACD continues to be bullish for the Aave Protocol token. The MACD histogram, which plots the difference between the MACD line (difference of 12-day and 26-day EMA) and the MACD signal line (9-day EMA of MACD), is charting expanding positive bars daily charts.

Expanding positive bars indicate the strengthening of bullish momentum for AAVE’s prices.

AAVE Price Ignoring Overbought RSI

The Aave protocol’s current rally runs the risk of a trend reversal, as both Bollinger bands and the relative strength index forecast an overbought signal for AAVE.

In detail, Bollinger bands consist of a simple moving average (middle band) and an upper and lower band. The two bands are usually two standard deviations from the middle band. Therefore, when an asset’s prices break above the upper bands, it denotes an overbought condition.

AAVE prices broke above the upper Bollinger band on Mar 29. Moreover, the Aave Protocol token continues to move above the indicator’s upper trendline. Therefore, a strong price correction seems to be on the books for AAVE.

Also Read: AAVE prices jump 43% after the launch of Aave V3.

Meanwhile, AAVE’s relative strength index shot into the overbought regions following Mar 29’s jump, currently clocking 81.67 on the daily charts. Traders often consider an overbought RSI a prelude to an upcoming trend reversal in bears’ favor. As such, overbought RSI levels often trigger sell-offs.

Traders relying on either of the two indicators would likely start a sell-off. As a result, AAVE could test immediate support near its 200-day MA (green wave) at $226.

Further downside movement would bring support near $209, a price level that supported AAVE prices between Dec 23, 2021, and Jan 19, 2022.

At the time of writing, AAVE was trading at $228, up 2.37% on the day.