AAVE, the native token of the leading decentralized lending protocol, continues its impressive rally, approaching its highest price in three years. With a market cap of $5.5 billion, AAVE is firmly positioned as the largest lending protocol in the crypto space, surpassing all other top 10 lending platforms combined. This year alone, AAVE’s price has surged by 220%, with 110% of that gain coming in just the past 30 days. However, as the price nears significant resistance levels, some signs of cooling momentum suggest that consolidation could be on the horizon.
The Relative Strength Index (RSI) for AAVE is currently at 59.2, down from a peak of 69.19 on December 23, when the token reached $382. The decline in RSI indicates that the asset has moved away from overbought conditions, where heightened buying pressure often leads to price corrections. Although AAVE remains in a neutral-to-bullish zone, the cooling of RSI suggests that a period of consolidation might follow after a strong surge in buying activity.
RSI, a momentum indicator, helps measure the speed and magnitude of price movements on a scale from 0 to 100. Readings above 70 are typically associated with overbought conditions, which could signal an upcoming price pullback, while readings below 30 are considered oversold and often precede a rebound.
Currently, with RSI at 59.2, AAVE shows relatively strong momentum, but the pullback from overbought levels may point to a short-term stabilization. This could allow the market to absorb the recent gains before deciding its next move.
AAVE’s Chaikin Money Flow (CMF) stands at 0.17, showing that there are still positive capital inflows into the market. The CMF reached a peak of 0.27 on December 23, indicating strong buying pressure. Although this momentum has cooled slightly, with CMF now at a lower value, the positive reading suggests that buyers remain in control, and the asset could maintain its current price levels or see further gains if buying activity continues.
CMF is a volume-weighted indicator that measures the accumulation or distribution of an asset over time. Positive values indicate buying pressure, while negative values suggest selling pressure. The current CMF reading of 0.17, despite its recent decline, signals that there is still enough buying activity to support AAVE’s price in the short term.
With the current positive momentum, AAVE could potentially reach $400, marking its highest price since 2021. The token is just 7.5% away from this milestone, and technical indicators such as the golden cross formation on December 23 and the positioning of exponential moving averages (EMAs) suggest that the uptrend could persist. If AAVE continues to rise, it could break through the $400 barrier, further solidifying its bullish trajectory.
However, the recent decline in CMF and the pullback in RSI raise concerns that the uptrend may be losing strength. Should momentum weaken, AAVE may face a correction, with support levels at $355. If this support fails to hold, further declines could occur, with potential targets at $297 or even $271.
AAVE’s recent price surge has brought it to the brink of a three-year high, and with bullish sentiment still strong, the token may continue its upward trajectory. However, technical indicators such as RSI and CMF suggest that the momentum could be cooling, signaling a potential consolidation phase or correction.
Traders and investors will be closely watching the $400 resistance level, as a break above it would confirm that the uptrend is still intact. On the other hand, a failure to sustain the current momentum could lead to a pullback, testing key support levels. Regardless of the short-term outcome, AAVE’s performance in 2024 highlights the growing interest in decentralized finance (DeFi) and lending protocols, with AAVE continuing to lead the charge.
Get the latest Crypto & Blockchain News in your inbox.