A sharp rebound move witnessed in the Aave (AAVE) market in the last three days has raised its potential to rise further in May, a technical indicator suggests.
AAVE price rebounds from key support
Dubbed a “rising wedge,” the pattern appears when the price rises inside a range defined by two ascending, contracting trendlines. It typically resolves after the price breaks below the lower trendline with convincingly rising volumes.
AAVE has been painting a similar ascending channel since early February 2022. The AAVE/USD pair has bounced in the past few days after testing the wedge’s lower trendline as support. This means the bulls are now eyeing the pattern’s upper trendline near $280, up over 40% from April 20’s price.
“Bull trap” levels to watch
Key “bull flag” levels to watch
Related: Aave v3 launch triggers 50% rally from long-term descending channel pattern
The bull flag scenario now puts AAVE at risk of testing the structure’s lower trendline near $109, which coincides with its 200-week EMA. Interestingly, the level is also near the rising wedge’s interim downside target, as discussed above.
But the flag setup indicates that AAVE’s long-term bias is to the upside. Hence, the pair could rebound from the lower trendline to a roughly $900 bull flag target in 2022-2023, up about 400% from April 20’s price.
Conversely, a decisive break below the 200-day EMA could expose AAVE to further selloffs, with the next downside target sitting near $72, a historical support/resistance level.
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Source: https://cointelegraph.com/news/defi-token-aave-eyes-40-rally-in-may-but-bull-trap-risks-remain