Aave DeFi Token Faced Major Correction After Surging 100% In One Month

The Aave defi token faced major corrections after surging 100% in one month and more than 50% of its gains, appeared after the platform proposed to launch a native stablecoin so let’s read more today In our latest cryptocurrency news.

The Aave defi token price doubled in a month but the bullish momentum can be reaching a point of exhaustion. Aave surged by over 103% after crashing to $45.60 and hitting $95.50 in July. The token’s sharp upside retracement move brought the price closer to the level and triggered some sharp pullbacks since June. In other words, Aave was testing an ascending trendline resistance which constitutes a bear flag pattern, and also, the previous test o the trendline ended up in a 20% downside move while a similar attempt pushed AAVE lower by 30%.

1/ Calling all GHOsts 👻 

We have created an ARC for a new decentralized, collateral-backed stablecoin, native to the Aave ecosystem, known as GHO.

Read more below and discuss your thoughts for the snapshot (coming soon)!👇https://t.co/P7tHl9LbBe

— Aave (@AaveAave) July 7, 2022

As a result of this behavior, AAve’s ongoing attempt to break above this trendline can be met with extreme selling pressure. A pullback could see the pair retesting the flag’s lower trendline of $67.75 which is down by 30% from the July 15 level. In the meantime, the $76.30 level serves as interim support due to the history as a price efloor in May which preceded a 60% rebound. As a rule of the technical analysis, the breakdown below $67.75 can see Aave dropping by the height of the flagpole which formed before the bear flag. This would have the token eye at $35.50 with the bear profit target down by 60%.

A continued rebound move above the bear flag upper trendline will invalidate the breakdown setup and in this case, the bullish target for Aave will be set between $115 and $120 range. More than half of the gains during the Aave price rally came after the proposal to launch a USD-pegged stablecoin named GHO. Aave Companies is a centralized entity that backs Aave’s lending protocol and it already requested the community to vote on their overcollatearlized stablecoin proposal with Aave’s price surging by 53% led by the speculation that GHO will boost the token’s adoption. Further gains will risk pushing Aave into overbought territory with the RSI trending five points below 70.

As recently reported, The lending protocol now has a total value locked of $6.6 billion as per Defi lama and it refers to the amount of crypto now being used in the protocol. People can use Aave which runs on Ethereum in order to lend or borrow digital assets without having to use a centralized intermediary. The native token Aave is the 47^th biggest crypto with a  market cap of $1 billion.