AERO – Assessing why it could face a bull trap at THIS level

Key Takeaways

The short-term signals were overall bullish for AERO, and strong demand in August meant that a move past the $1.3-$1.45 supply zone was a possibility. Yet, the market-wide sentiment was muted, and a bullish breakout might be unlikely for now.

Aerodrome Finance [AERO] saw an 8.28% uptick in Open Interest (OI) in the past 24 hours.

Meanwhile, its price was up only 0.6% over the past day. This indicated that sentiment among speculators had shifted strongly bullishly.

Source: Coinalyze

It promised a short-term rally, but the data also presented a warning signal. The Funding Rate turned deeply negative even as prices climbed higher, showing a larger number of traders were willing to go short.

To add to this confusing medley, the spot CVD saw a swift jump in recent hours. Overall, the bullish signals outweigh the bearish ones, but traders should manage their positions carefully.

Bitcoin [BTC] was trading near the $112.4k support, at press time, and Ethereum [ETH] has also been bearish over the past week.

Should Aerodrome Finance traders bet on a breakout or a correction?

Source: AERO/USDT on TradingView

AERO managed to poke its head above an early 2025 resistance on the price chart. The DMI showed that a strong uptrend was in progress, with the +DI and ADX both well above 20, at press time.

The A/D indicator also highlighted decent buying pressure in recent weeks, although it has slowed down.

Similarly, the MFI has also slipped lower slightly, following AERO’s inability to breach the $1.4 supply zone.

Source: CoinGlass

The liquidation heatmap showed that Aerodrome Finance prices had just swept  pocket of liquidity above $1.4. While further gains were possible, it appeared more likely that the price would retrace toward $1.2.

With all the differing signals on different timeframes, how should traders view the market?

Simply, a move to $1.2 might not be a bearish outcome. In a few days, a retracement to the $1.1-$1.2 area could offer a buying opportunity.

Meanwhile, a breakout past $1.45 right away might be a bull trap driven by a liquidity hunt.

Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion