The Aave price is on course to post its lowest daily close since January. This could be the trigger for a significant sell-off in the days ahead.
Aave is last trading at $267.00 down $11.59 (-4.17%)
If Aave closes below $276.60 today, a return to the May $206.81 low looks probable.
The DeFi-focused token has come under considerable pressure of late. The Aave price has declined 33% since the 3rd of June and over 62% from the May $707.67 high.
After the monumental sell-off in May, Aave strongly rebounded from the lows. However, like most of the cryptocurrency market, over the course of the last month, the upside momentum has not only faltered but reversed entirely. So much so that just 10 days ago, the price was over $400, and this morning I am contemplating it returning closer to $200.
As we can see on the daily chart, two days ago, Aave closed below the 200-day simple moving average for the first time in 2020. The last time the price crossed above this barrier, the moving was at $30.16. This highlights just how far prices ran at the start of this year.
Notably, after setting the previous record of $628.65 in March, the price has never closed below $276.60.
In my mind, this is a significant number. During the huge volatility between March and early April, Aave bounced sharply from this level on two occasions. Even in May’s historic meltdown, the price settled higher.
A clear uptrend from November 2020 is seen at $206.00. This perfectly aligns with the May low and should be considered a strong support level.
Of course, the day is still young, and a lot could change over a few hours. But for the moment, the outlook appears grim.
However, Aave might be thrown a lifeline if it closes above the resistance. Although, until the 200-day is recovered, the trend remains negative and points to further price destruction.
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