Aave Retests Breakout Zone Amid 8% Ethereum Drop

Cryptocurrency market has recently experienced a notable pullback, largely driven by rising geopolitical tensions. Ethereum (ETH), for instance, has shed over 8% in the past three days and now trades near $2,500. This market-wide volatility has also affected other altcoins, including Aave (AAVE).

Despite trading in the red today, AAVE’s chart is flashing a promising technical signal. A classic bullish retest is underway, suggesting that a potential bounce could be in the cards. On the daily timeframe, AAVE has formed a textbook Cup and Handle pattern — a widely recognized bullish reversal setup that often precedes strong upward moves. The "cup" portion developed between February and late May, beginning with a sharp decline from around $283 and rounding out with a bottom near $114.

After bouncing from the handle’s low near $237, AAVE broke out of the neckline resistance zone above $283 on June 10, pushing the price to a local high of $325. However, as is often the case with breakout moves—especially in a volatile macro environment—AAVE is now pulling back, retesting the same breakout zone. The current price hovers around $271, sitting right in the low of the neckline support.

If the neckline zone between $268 and $283 holds as support, AAVE could be preparing for its next leg up. The immediate target would be the $379 resistance zone, marked by a historical supply area from previous price action. A successful move above that level would validate the Cup and Handle breakout and unlock the full measured move potential — targeting as high as $438, which would mark a 61% rally from current levels. However, failure to hold this key support range may delay the bullish setup, especially if broader market pressures remain elevated.

Ask Aime: Is the Ethereum market recovering from its recent pullback?