The price of AAVE, the native token of the decentralized finance (DeFi) lending protocol, is consolidating at a critical technical juncture, with on-chain and derivatives data pointing to strengthening bullish sentiment. At press time, AAVE was trading around $194, showing modest gains against a broader bearish market trend where Bitcoin struggled below $90,000.
AAVE is currently testing a major confluence of long-term resistance levels. On the 3-day timeframe, the token is pressing against the 200-day moving average, a historically significant level that has often dictated trend changes. Simultaneously, it is approaching a multi-year descending trendline that has capped recovery attempts since the 2021 highs. A clean breakout above both this moving average and the long-term trendline would signal a potential shift from its prolonged downtrend.
On-chain and derivatives metrics support a positive outlook. Data from CryptoQuant indicates large whale orders in Aave's spot and futures markets, alongside cooling bearish conditions and buy dominance. The Open Interest-Weighted Funding Rate flipped positive last week, standing at 0.0088%, suggesting that longs are paying shorts—a historical precursor to price rallies. Furthermore, the AAVE long-to-short ratio is near a monthly high at 1.01, indicating that bullish sentiment currently outweighs bearish sentiment among traders.
Technically, AAVE is trading within a descending parallel channel on the 4-hour chart and is approaching the upper boundary. A breakout above this channel could trigger a bullish shift. Momentum indicators are turning favorable: the 4-hour Relative Strength Index (RSI) is at 50, showing growing bullish momentum, and the Moving Average Convergence Divergence (MACD) recently completed a bullish crossover that remains intact.
The immediate price targets are clear. If bullish momentum holds and a breakout occurs, the first major resistance level sits at $235, with a potential medium-term target near $296. However, the short-term price action is described as "messy" and lacking decisive momentum. The key support to watch is the $171 area, which aligns with Fibonacci retracement levels. A loss of this support would invalidate the current recovery structure and likely lead to a deeper pullback.
