AAVE Analysis: Price Approaches 3-Year ATH Amid Bullish Sentiment

The price of Aave (AAVE) continues to rise, consolidating its position as the largest lending protocol in the cryptocurrency space with a market capitalization of $5.5 billion—more than the total capitalization of all the top lending protocols combined.

This token has impressively increased by 220% this year and 110% in the past 30 days, driven by strong momentum and growing market interest. Technical indicators like RSI and CMF show a positive trend is underway, although there are some signs that momentum is cooling, which could lead to a correction in the future.

RSI is neutral after approaching overbought territory

The current Relative Strength Index (RSI) is 59.2, down from 69.19 on December 23rd, when the price reached a peak of $382. This decrease in RSI shows that the AAVE price has moved out of the overbought zone, where high buying pressure often leads to price corrections. Although the current RSI still reflects relatively strong momentum, this adjustment suggests the market may be stabilizing after a period of strong buying.

RSI is a momentum indicator that measures the speed and magnitude of price movements on a scale from 0 to 100. Values above 70 indicate overbought conditions, signaling a potential correction, while values below 30 indicate oversold conditions, often leading to a recovery.

With an RSI of 59.2, this coin remains in the neutral to bullish range, suggesting the uptrend may continue in the short term if buying momentum is rebuilt. However, the decrease from the overbought level also indicates that the AAVE price may undergo a correction, allowing the market to absorb the recent gains before deciding on the next direction.

CMF remains very positive, but has decreased from the recent peak

The Chaikin Money Flow (CMF) of AAVE is currently 0.17, maintaining a positive trend since December 23rd, when it reached a peak of 0.27. This indicates that AAVE has experienced stable capital inflows, reflecting strong buying pressure in the market. Although the CMF has decreased from the recent peak, the positive value shows that buyers are still in control, albeit with a slight decrease in intensity.

CMF is a volume-based indicator that measures the accumulation or distribution of an asset over a specific time period, ranging from -1 to +1. A positive CMF value indicates accumulation and buying pressure, while a negative value represents distribution and selling pressure.

With a CMF of 0.17, the positive capital inflow suggests the token may maintain its current price level or even increase further in the short term if the buying activity continues. However, the decrease from the December 23rd peak indicates that momentum may be cooling, potentially leading to a period of correction before a decisive move.

AAVE Price Prediction: Can it reach a new all-time high?

If the current positive momentum continues, the AAVE price could test the $400 level, an important mark representing the highest price since 2021. The token needs to increase by only 7.5% to reach this milestone, supported by the formation of a Golden Cross on December 23rd and the EMA lines indicating the uptrend may continue. The alignment of these technical indicators suggests that the bullish sentiment remains strong, with the potential for buyers to push the price even higher if the trend holds.

However, as the CMF has indicated, the strength of the uptrend has decreased compared to a few days ago, signaling the possibility of a trend reversal. If the AAVE price uptrend loses momentum, the price could decline to test the $355 support level. If this support level does not hold, AAVE could experience further declines, with potential targets at $297 or even $271, reflecting a significant correction.

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