Over the past seven days, AAVE [AAVE] has emerged as one of the leading performers in the digital asset market, marking a significant 20% increase in value during this period.
This remarkable rally has propelled AAVE’s market capitalization to surpass $2.5 billion, nearly doubling within just three months.
While the broader market encountered fluctuations in Q3 2024, AAVE stood out with its substantial gains, attracting a wave of new investors keen on capitalizing on the upward trend.
According to Santiment, the number of wallets holding a minimum of 100 AAVE tokens has risen by more than 7% since mid-June, totaling around 3,229 wallets. This surge in wallet activity has been a driving force behind AAVE’s recent price surge.
The prevailing positive sentiment among buyers is evidenced by the ongoing dominance of buyers in AAVE’s price movements, as highlighted by the Chaikin Money Flow (CMF) remaining in positive territory since August.
Additionally, the Relative Strength Index (RSI) sitting at 69 indicates the continuation of bullish momentum in AAVE’s market.
Nevertheless, with AAVE’s price doubling since August, there are concerns of a potential overheating of the token. Are there any warning signs to watch out for?
AAVE Price Projection
At the current moment, AAVE is trading at $168 and is maintaining its upward trajectory within an ascending channel on the one-day chart.
Recently, an attempted breakout from this channel was thwarted as AAVE faced resistance at $180, leading to a swift pullback.
The overbought conditions signaled by the Williams %R indicator, where AAVE hit a resistance at this level, resulted in a corrective move with the indicator now registering at -24, indicating a cooling off of the rally.
Even after the retracement, AAVE remains above the midline of the channel, finding support around the 0.786 Fibonacci level at $158.
Continued consolidation within this range could set the stage for another breakout if buying pressure remains robust.
On the flip side, a failure to sustain levels above the critical support at $148 might lead to a dip below the lower trendline of the channel, signaling a potential bearish reversal.
Traders who entered the market during the rally might consider offloading their positions if this support level is breached to safeguard their profits.
Simultaneously, a significant volume of over 456,000 AAVE tokens were acquired within the price range of $161-$182, suggesting potential volatility as traders navigate between managing losses and maximizing gains in this price bracket.