AAVE Poised for 29% to 68% Gains as Bullish Pattern Emerges

AAVE, a prominent decentralized finance (DeFi) protocol, is currently exhibiting a bullish pattern that suggests a potential upside move. The cryptocurrency is forming a falling wedge pattern, which is typically seen as a bullish indicator. This pattern occurs when the price of an asset makes a series of lower highs and lower lows, creating a wedge shape on the chart. The current price of AAVE is on the verge of breaking out of this pattern, and once it breaches the upper trendline, it could signal a significant rally.

The falling wedge pattern is significant because it often indicates a reversal in the trend. In this case, if AAVE successfully breaks above the upper trendline, it could lead to a substantial price increase. This pattern is particularly noteworthy because it suggests that the current downward trend may be coming to an end, and a new upward trend could be on the horizon.

The potential breakout of AAVE from the falling wedge pattern is supported by the overall market sentiment and the recent performance of other cryptocurrencies. For instance, Ethereum's impressive 21% weekly gains, having crossed the $3,350 mark, indicates a bullish sentiment in the broader cryptocurrency market. This positive market sentiment could provide additional momentum for AAVE's potential rally.

Furthermore, the technical analysis of AAVE's price movement suggests that the cryptocurrency is currently at a critical juncture. The price is grinding higher, poking above the swing high, which was previously rejected to test the weekly pivot. This movement indicates that AAVE is gaining strength and could be poised for a breakout.

AAVE appears to be in the early stages of forming a classic ABC Zigzag corrective wave pattern. The move from $114.16 to $317.68 marked Wave (A), showing a strong bullish impulse. This was followed by a healthy pullback to $213.25, completing Wave (B). Now, AAVE is climbing again, suggesting Wave (C) is underway — the final leg of the pattern, typically another impulsive upward move.

If this structure continues to unfold as expected, AAVE could be heading toward a target range between $416 and $542. These levels represent the 1.0x and 1.618x Fibonacci extensions of Wave A, often used to project the end of Wave C. From the current price around $322, this move could bring gains of nearly 29% to 68% — if the bullish sentiment continues.

For the bullish outlook to remain intact, AAVE needs to hold above the $323.56 level, which closely aligns with the peak of Wave (A). Sustaining this level would likely confirm the structure and open the doors for further upside. However, if the price drops below $300, it could temporarily delay the rally or lead to some consolidation.

With momentum building and technical patterns aligning, AAVE could be preparing for a strong rally. However, traders should remain cautious and watch for confirmations. The overall market conditions are also favorable for AAVE. The cryptocurrency market has seen a notable decline in recent weeks, but this could be a temporary setback. The overall market capitalization of the cryptocurrency market has decreased by more than 3% in a single day, which could create a buying opportunity for investors.