Aave (AAVE/USD) was trading over 5% higher on Monday, while strongly outperforming Bitcoin (BTC/USD). Aave is an open source, non-custodial, decentralized lending protocol that allows users to earn interest on deposits and borrow digital assets. Aave offers simplified, decentralized access to a wide range of digital assets and interoperability with various decentralized finance (DeFi) platforms. Aave is down over 50% earlier this month after a deep sell was seen in the broader market, so it looks like Aave may be seeing a near-term reversal due to panic selling that may have led to Aave being oversold.
Aave was one of the worst performing coins of October after the Bitcoin sell-off began, Aave hit a new high of $495 in October and hit a new low of $130 earlier this week – a drop of 70%. Aave still has great fundamentals so it may be worth accumulating Aave here, however investors should expect buyers to return and regain some strength in Aave as it could drop further. Monday's 5% rise could be the start of a short-term rally, however investors should be patient and see how strong Aave is at the moment.
Here's what the charts are pointing to
After the sharp drop earlier this month, Aave was oversold on the RSI and thus has been consolidating in a very tight range ever since.
It looks like significant movement could be seen soon, so traders can enter once the $161 resistance is cleared.
A bullish divergence of the RSI can be seen, suggesting that a bullish breakout could be seen in the near future.
Investors can set a target of $200, followed by $280 and a stop-loss can be set at $130.
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