Aave struggles within expected range amid pressure from raised reserve factors: weekly forecast

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Aave slides 17.03% this week

Highlights

Aave trades at $109.31 after declining 17.03% over the past 7 days, showing persistent downward momentum.
The asset remains below key moving averages, with the trend confirmed by a sharp rise in volatility to 23.2%.
Aave is expected to trade between $88.98 and $122.73 in the coming week, with a 75% probability of further downside unless it breaks above $134.94 resistance.

Record deposits and protocol upgrade fuel sentiment shift amid DAO reforms

Aave's version 3.8 protocol upgrade was launched across 15 public chains this past week, introducing new reentrancy protections following a governance process and DAO approval, according to KuCoin. Governance proposals have also raised reserve factors across 54 Aave markets, a change set to boost DAO revenue by about $3.5 million annually but which may lower some supplier yields, as TokenPost and BitRss highlighted. Meanwhile, Aave V4 achieved record deposits of $1.75 billion, more than doubling since August as reported by CryptoBriefing, and governance discussions continue around further risk management measures.

Oversold signals emerge as volatility spikes and price holds near support

The daily chart reflects a sustained move lower with a firm trend as volatility over the past week spiked to 23.2%. CCI and Stochastic RSI are both oversold, signalling possible selling exhaustion and rebound potential, while MACD aligns with the broader move lower. The price is holding just above support at $109.33, with notable resistance at the Ichimoku Kijun around $134.94. This setup points to persistent downside momentum as long as the asset remains anchored under resistance.

Downside risk persists in coming week unless resistance levels are reclaimed

In the week ahead, Aave is expected to trade between $88.98 and $122.73, with a 25% probability of an increase and a 75% probability of a decrease. The base case sees continued pressure below resistance at $109.33. A move above $134.94 could open room for a rebound, while a drop under support risks extension toward the lower end of the expected range.

Anton Kharitonov, expert at Traders Union, notes that Aave (AAVE) slid around 17% over the past week to trade near $109. The decline was accompanied by increased volatility and signals of selling exhaustion on key daily indicators. While the launch of the version 3.8 protocol upgrade across 15 public chains and record deposits for Aave V4 show strong development and user interest, this was offset by governance changes raising reserve factors, potentially lowering supplier yields even as DAO revenue is projected to grow. The price is holding just above support at $109.33, with resistance firmly in place at $134.94. Kharitonov believes that downside momentum will likely persist unless price reclaims resistance, while a break below support raises risk for a deeper pullback. "Base case is continued pressure as long as AAVE stays below $134.94 — I remain cautious in the coming week."

Previously it was reported that major debt positions on Aave, such as those managed by BTCS, have faced increasing risk due to ongoing collateral pressures in DeFi markets. This latest analysis adds a technical perspective, highlighting that with volatility elevated and Aave holding above key support, traders should closely monitor for a decisive move outside the $88.98–$122.73 range as a signal for the next directional shift.

Source of Data: AAVE Price Analysis by TU

The analysis is based on a proprietary model combining technical, on-chain, and expert data. Not investment advice. See methodology

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