Aave (AAVE/USD) Eyes the 215 Support as the Crypto Rout Continues
The recent fall in the crypto token Aave seems to be far from over. The cryptocurrency is now trading below the previous support of 315, which has now turned into a resistance area. At the time of writing, AAVE/USD was trading at 274.8, and on its way down, with 215.8 as the next immediate support.
In our previous outlook, we pointed out that 315 was an important area for AAVE/USD. As projected, prices bounced off from this level, which was acting as support at the time. However, with the crypto token now trading below that level, we expect it to take longer before it breaks to the upside. That means that AAVE/USD could comfortably reclaim the 215.8 support before potential buyers break past the resistance at 315.
– Technical Levels on the Daily Chart
A look at the daily chart above shows that AAVE/USD is on a clear downtrend. After breaking below the support at 315, prices consolidated for a few days before trading lower from an inside bar price pattern.
I project that AAVE/USD will continue trading lower until the crypto token finds support, potentially at 215.8.
Why AAVE/USD Could Continue to Fall
Crypto Sentiment
The overall sentiment in the crypto markets has been bearish in the past month. Although the sentiment is changing, some cryptocurrencies are still trading at their monthly lows, which means that a lasting bullish momentum has not yet developed. The decline in AAVE/USD could continue, based on the weak sentiment.
Falling TVL
The Total Value Locked (TVL) on Aave has been falling since the first week of September. The TVL stood at $18.149 billion as of September 7, and it is now at about $13.593 billion, which means the cryptocurrency has been experiencing outflows this month.
With the declining TVL, we project that AAVE/USD will lack bullish power, or that new buyers could be reluctant to enter a trade.
AAVE/USD Trade Idea
Based on the fundamental analysis and technical pointers, I project that AAVE/USD will maintain its bearish momentum, at least in the short term. I recommend a sell trade at the current level or after a short retracement towards the resistance at 315. Sell trades should target the support at 215.8. Good luck!
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