AAVE (AAVE) has confirmed a significant technical breakout on its daily chart, signaling a potential end to a prolonged corrective phase and the beginning of a bullish reversal. The token, trading around $173.34 as of January 18, 2026, is exhibiting strong technical patterns and stabilizing derivatives data that point to improving market conditions.
The key development is a confirmed upside breakout from a descending broadening wedge pattern on the daily timeframe. This structure, which formed over months of corrective price action marked by expanding volatility, has now been invalidated. The breakout above the wedge's upper limit indicates a transition in market control from bearish to bullish. Analyst Clifton Fx highlighted this structural shift, noting that daily closes above the former resistance level add confirmation to the breakout narrative.
On shorter timeframes, AAVE is trading within a clearly defined rising channel, honoring a pattern of higher highs and higher lows. The token recently defended a crucial local support level at $165, with the channel's lower boundary around $166.61. The immediate resistance zone is identified between $180 and $186. A clean breakout above this area is seen as a sign of returning buyer strength, which could propel the price toward the psychological $200 level. Analyst CryptoRand stated the setup looks "absolutely primed" for a full bullish reversal.
Supporting the technical picture is a reset in derivatives market conditions. Following a sharp volatility event in October 2026 that flushed overleveraged long positions, liquidation pressure has normalized. Data now shows a more balanced environment with reduced speculative pressure. Open interest and trading volume are distributed across major exchanges like Binance and Bybit without signs of excessive leverage buildup, suggesting healthier positioning that can support a structurally driven price move.
AAVE's market capitalization remains substantial at approximately $2.65 billion, reinforcing its status as a leading DeFi protocol. The token's recent performance shows a slight 0.97% dip over 24 hours but a 4.22% gain over the past week, aligning with the emerging bullish structure.
