AAVE - Rally Incoming?

As we well know, the market moves in waves, whether they are bullish or bearish. This information gives us the possibility to apply the Eliot wave theory and observe if there is a possible harmony of the movement in the AAVEUSD price.

This first part of the analysis the price uses 5 movements (1-5 waves), which is something very complex to determine, but we have several confirmations that the analysis has a good chance of being correct since the characteristics that strengthen said analysis are:

1- When the price regresses after the bullish momentum both from 1 to 2 and from 3 to 4, the minimums that are formed (at point 2 and at 4) are below the previous maximum and always above the previous minimum.

2- The wave produced from point 2 to point 3 cannot be the shortest movement in any case. Here, we can verify that it is the longest extension of the four, therefore, it is still a very well-structured analysis.

3- The last step. To confirm that we are in the last movement of the trend (in this case bullish), it is necessary that there is a divergence between point (3) and (5). The meaning of a divergence is the exhaustion of a trend and the start of another in the opposite direction; in the AAVE chart, you can perfectly observe the divergence using the RSI (Relative Strength Index).

If we look at the main chart, we join the waves (3) and (5) with an uptrend line painted in red, while in the chart located at the bottom (RSI), we join the points with a downtrend line. This event tells us that the uptrend is running out and a new downtrend is about to begin.

In the second part of the analysis, we can see how the price uses three movements A-B-C to complete the downtrend. What’s interesting is that the data which notably reinforces our hypothesis that the downward-trend of this movement is coming to an end, is again the divergences which we find between points (A) and (C), since to join these two points in the chart, we do so with a downtrend-line while in the RS, it is a straight or flat line.

Therefore, given the previous information, we can suspect that it is the beginning of a new bullish trend. Adding to this, the price is rebounding from a consistent support level that has already been tested several times in the past.

With this hypothesis, it would be logical for the price to begin to rise, and we could even see the price of AAVE to hit $123 in the coming weeks.