Aave’s native token, AAVE, is back under pressure after a short-lived breakout attempt above a key resistance zone. The token had surged past the $280 level earlier this week, giving bulls renewed hope. However, market volatility, compounded by Bitcoin’s rejection at $110,000, quickly erased those gains. At the time of writing, AAVE is trading closer to $260, down from its midweek peak of $325.

Now, with rising sell pressure and technical support being retested, analysts warn that a deeper retracement to $240 may be on the horizon.

AAVE’s Breakout Turns Into a Bull Trap

AAVE began the week strong, climbing from $253 to $325 in just two days—a 28% jump that momentarily signaled a breakout from its consolidation range. The move was initially seen as confirmation that the token could regain its bullish footing.

However, by Friday, the rally had completely reversed. AAVE slipped back below $280 and re-entered a prior trading range between $240 and $280. The failed breakout, coupled with Bitcoin’s sudden pullback, triggered a wave of selling pressure across altcoins—AAVE included.

The abrupt reversal points to a classic bull trap, where breakout buyers are left holding positions in a rapidly declining market.

Long-Term Chart Suggests Range-Bound Movement

Despite the recent setback, AAVE’s weekly chart still shows signs of long-term range formation. After a strong rally in late 2024 that peaked above $400, AAVE corrected sharply in Q1 2025, returning to pre-rally levels near $125. That complete retracement erased all prior gains and reset expectations.

Now, technical analysts view the $125–$400 zone as a developing range. The midpoint of this range, around $262, has acted as both support and resistance over the past month. A clean weekly close above $280 could have reinforced a bullish breakout, but with prices now back below that level, caution remains warranted.

One encouraging sign for long-term investors is the On-Balance Volume (OBV) indicator, which has been trending upward since April. This suggests that, despite recent selling, some accumulation may still be occurring behind the scenes.

Daily Chart Highlights Key Support Levels

On the daily chart, the price action is more telling. AAVE’s brief breakout above $280 was followed by heavy selling, pushing the token back into its established range between $240 and $280. The move down was accompanied by a notable spike in trading volume, indicating that the sell-off was not simply a low-volume retracement but rather a shift in sentiment.

The OBV also fell sharply, making new lows for the month. This confirms that recent trading was driven by distribution rather than accumulation, signaling bearish dominance in the short term.

However, moving average indicators tell a slightly more optimistic story. Both the 20-day and 50-day moving averages are sloping upward, showing that some upward momentum still exists. The 50-day moving average, in particular, is converging near the $240 support level, offering a possible area of confluence where buyers may re-enter the market.

Could $240 Be a Buy-the-Dip Opportunity?

For traders and investors watching AAVE closely, the $240 level is shaping up to be a critical test. Not only does it mark the lower boundary of the current trading range, but it also aligns with the 50-day moving average, a level often respected in trending markets.

If AAVE manages to hold $240 and attract fresh buying volume, the token could stabilize and mount another attempt at $280 and higher. However, if $240 fails to hold, the next downside targets could extend to $210 or even lower.

At present, market sentiment remains mixed. While long-term structural support levels remain intact, the short-term outlook has clearly shifted toward the bearish side.

Outlook: Short-Term Bearish, Long-Term Cautiously Optimistic

In summary, AAVE’s failed breakout above $280 casts doubt on the strength of the recent rally. Although the long-term setup suggests that the token may be forming a large accumulation range, the near-term trend points to further downside unless buyers return at $240.

Investors looking for entry points may want to wait for signs of stabilization near key support zones before committing capital. A confirmed bounce, accompanied by rising OBV and volume, could mark the beginning of a more sustainable move higher.

Until then, caution remains the name of the game.