AAVE Hits Pivotal Level: Descending Triangle Could Lead to Breakout

Key Takeaways

• Elliott Wave correction completed, signaling potential trend reversal.
• A bullish breakout is forming as the price challenges resistance levels.
• RSI is neutral with upside potential and is supporting a continuation rally.

Aave (AAVE) exhibits a potential bullish reversal following a corrective wave structure. The higher time frame analysis indicates that AAVE has completed a Wave 4 correction and may be preparing for the next impulsive phase.

The lower time frame setup suggests an early-stage five-wave development, reinforcing a possible breakout scenario.

AAVE Price Analysis

The 4-hour chart of AAVE displays a well-defined five-wave Elliott Wave structure. The asset previously peaked at $398 on Dec. 16 before entering a corrective phase.

The correction took the form of an ABCDE pattern, finding support near the 0.5 Fibonacci retracement level around $236.

Wave 4 appears to have reached completion, as price action recently rebounded from the descending triangle support, a classic bullish reversal signal.

The breakout above the triangle structure would confirm the transition into Wave 5, potentially leading to new highs.

The Relative Strength Index (RSI) on the 4-hour timeframe is neither overbought nor oversold, indicating a neutral stance that provides room for further upside.

However, the price must reclaim key resistance levels, particularly the 0.382 Fibonacci level at $275, to solidify a bullish outlook.

If the price sustains above the 0.236 Fibonacci retracement at $322, it could confirm the start of a new bullish impulsive wave.

However, failure to maintain support above $236 may indicate a continuation of the corrective phase, potentially targeting deeper Fibonacci levels near $198.

AAVE Price Prediction

The 1-hour chart provides a more detailed look at AAVE’s short-term wave count. It suggests that Wave 5 has begun, with sub-waves (i) and (ii) already formed.

On Feb. 3, we saw a sharp drop to $195, followed by a 47% recovery to a high of $283. A pullback was seen retesting the 0.5 Fib before its next rise began.

The price is at a pivotal point, as it approaches resistance at $275 (0.382 Fibonacci level)

Wave (iii) is expected to push the price toward the $322 level, aligning with the 0.236 Fibonacci retracement from the prior decline.

A brief corrective pullback in wave (iv) could find support around $299 before the final leg (wave v) extends toward $356, a key confluence zone where previous highs align with the next major resistance.

Failure to clear $275 could invalidate this bullish scenario, leading to a retest of support at $236. However, given the structure and momentum, a breakout above $275 would likely confirm the next wave up.

The RSI on the 1-hour chart shows moderate bullish momentum but has yet to reach overbought conditions, suggesting further upside room before any significant retracement occurs.

Key Levels to Watch

• Immediate Resistance: $275 (0.382 Fibonacci retracement).
• Key Support: $236 (0.5 Fibonacci retracement).
• Critical Support: $198 (0.618 Fibonacci retracement).
• Short-Term Target for Wave (v): Above $356 if momentum sustains.
• Invalidation Zone: Below $236, signaling further downside risk.