AAVE: The Squeeze Is On

[lingriiddd]

We're watching a textbook compression pattern on AAVE—price trapped between ascending support at $173.25 and descending resistance at $198.53. These narrowing wedges don't last forever. The question isn't if it breaks, it's which direction and how violently. Current price: $175.48.

1. THE TECHNICAL REALITY
   • Wedge Compression: Ascending support at $173.25 (4 touches from $80.01) vs descending resistance at $198.53 (8 touches from $237.08)
   • Trend Structure: Trading below all three major EMAs (20/50/200)—path of least resistance is down
   • Rejection Signal: Massive 75.8% upper wick shows aggressive selling pressure defending higher prices
   • Volume Context: 50% below average ($51k vs $101k)—no conviction behind bounce attempts

2. THE INDICATORS ️

Bearish Signals:
• MACD bearish and diverging further negative (-1.98 vs -1.70 signal)
• ADX at 30.3 confirms moderate trend strength pointing south
• Bearish order block overhead at $193.18-$186.41 acting as supply ceiling
• Lower high structure with deteriorating momentum

Bullish Signals:
• RSI at 32 screaming oversold
• Stochastic at 16.6 in extreme territory
• Ascending trendline at $173.25 has held for months

The Conflict:
We're oversold, but oversold can stay oversold in a trending market. Weak volume means any bounce lacks conviction. The trendline is the last line of defense.

3. THE TRADE SETUP

Scenario A: Breakdown (Primary Path - 68% Confidence)
• Trigger: Rejection at $177-$179 zone (EMA20 resistance)
• Entry: Break below ascending trendline at $173.25
• Target 1: $169.36 (swing low + bullish OB top)
• Target 2: $162.19 (strong support low)
• Stop: 4H close above $193.18
• R/R: ~1:0.5 on first target, but probability-weighted favorable

🟢 Scenario B: Bullish Reversal (Alternative)
• Trigger: 4H close above $193.18 (flips bearish OB to support)
• Entry: Retest of $193.18 as support with volume confirmation
• Target: $210.36 (bullish change of character)
• Invalidation: Failure to hold $193.18 on retest

MY VERDICT
The higher probability play is watching for breakdown below $173.25 and riding it toward $169.36. We've got alignment—bearish structure, deteriorating momentum, weak volume, rejection wicks. But that ascending trendline is the make-or-break level. If it holds with a volume spike, I'd reassess quickly. Until then, the setup favors the downside.

Are you fading this oversold condition or playing the breakdown? What's your read on that $173.25 trendline?

[etfs]

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