AAVE Consolidating at Critical Support Zone

Yesterday we observed AAVE trading in uncertain territory around the 285 level with mixed signals across timeframes suggesting indecision, and today that call has materialized into a notable pullback as the token tests the critical 278-280 support zone we identified. The price action confirms our caution about the vulnerability of this level, with lower timeframes showing extreme oversold conditions that indicate either capitulation or potential reversal setup. Our analysis highlighted the importance of the 270 platform as the previous resistance turned support, and today’s movement brings this level into sharp focus as the line in the sand between corrective pullback and full trend reversal. The two-hour chart reveals the most dramatic oversold reading with Stochastic RSI at 2.60, while the RSI dropped to 33.06, both signals we warned could either spark a technical bounce or confirm further weakness if volume doesn’t materialize.

The four-hour timeframe maintains its bearish DEMA arrangement we discussed, with price unable to reclaim the faster moving averages despite brief attempts, validating our view that the downtrend structure remains intact until proven otherwise. Multi-timeframe analysis shows the weekly chart’s oversold Stochastic RSI at 5.70 creating divergence with the still-positive MACD, suggesting this correction is occurring within a larger uptrend context rather than marking a major top.

Looking ahead, we maintain our view that AAVE faces a binary outcome from current levels: either a relief bounce toward the 288-295 resistance zone we identified, which would offer better risk-reward for shorts, or a breakdown below 270 that would confirm the entire platform has failed and open the door to significantly lower prices toward 240-250. The negative money flow across most timeframes, particularly the four-hour CMF at negative 0.23, suggests accumulation has not yet begun despite oversold technical readings.

What distinguishes today’s environment from yesterday is the urgency of the setup, as multiple timeframes have now reached extreme readings that historically precede either sharp reversals or final capitulation moves.

Our forecast centers on the 270-295 range as the battleground for the next 48 hours, with a bias toward downside continuation unless we see decisive reclamation of 285 with strong volume. Traders should watch for potential short-term bounces from extreme oversold conditions but maintain awareness that the structural bearish setup remains valid until price reclaims and holds above 300, the level we’ve consistently identified as the bullish invalidation point.

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