Aave has pulled back from the value area high and is now trading near the point of control. A bullish channel formation is developing, with a potential reversal setup forming at support.
Summary
- AAVE is forming a bullish trading channel with support near $227.
- The current correction is healthy if the channel low is respected.
- A successful retest could trigger a move toward $390 resistance.
Aave (AAVE) has entered a healthy correction after rejecting from the upper boundary of its current trading range. The move has brought price action back toward the point of control, where a potential bottoming structure may develop. If support is confirmed, Aave is positioned to complete a trading channel that could dictate price behavior over the coming weeks and months.
Key technical points
- Current Support Zone: Point of control, with a developing bottoming structure.
- Channel Formation: Price action forming a bullish channel with potential fourth touch.
- Key HTF Support: $227 level must hold to confirm the structure remains bullish.
Aave’s price has retraced from its value area high and is now approaching the point of control, a key area where volume previously accumulated. Despite the lack of immediate support here, this region is a likely candidate for the formation of a bottoming structure, which would complete the lower boundary of a developing trading channel.
This channel is taking shape as price continues to rotate between clear levels, maintaining a consistent trend of higher highs and higher lows. A successful hold of this lower channel boundary would mark the fourth touchpoint, adding further confirmation to the validity of the channel formation. As long as price respects the bottom of the channel, the bullish structure remains intact.
Price may still correct further below the point of control in order to fully test the lower end of the channel. This correction, while short-term bearish, would be structurally bullish as it sets up a new higher low in the overall trend. Additionally, this level coincides with a high time frame support zone at $227, adding further confluence.
If this support zone holds and buyers step in, Aave would be well-positioned for a rotation back to the value area high, and potentially a test of the high time frame resistance at $390. This would complete the cycle within the channel and keep momentum aligned with the broader uptrend.
The key to watch is how price behaves around the channel low and whether volume supports a shift back to the upside. If the structure holds and buyers reclaim control, this could mark the beginning of the next bullish leg. A breakdown below $227, however, would risk invalidating the structure and shift the bias toward a deeper correction.
What to expect in the coming price action
Aave is currently in a bullish correction phase. If the channel low and $227 support hold, expect a rotation back to $390 resistance. Market structure remains bullish while within the trading channel.
