An analyst has highlighted that Aave is currently displaying a bearish pattern that has historically led to significant declines the last four times it emerged.
In a recent post, analyst Ali Martinez discussed a Tom Demark (TD) Sequential signal that has recently appeared on Aave’s daily price chart. The TD Sequential is a widely-used technical analysis indicator that identifies potential reversal points in an asset’s price. This indicator features two phases: the setup and the countdown. During the setup, consecutive candles of the same color—either red or green—are counted up to nine. Reaching nine such candles often indicates a potential point of trend exhaustion. If the candles leading up to this point are green, the TD Sequential signals a sell opportunity; if they are red, it suggests a potential upward turnaround.
Once the nine-candle setup is complete, the countdown phase begins. This phase is similar but extends to thirteen candles, suggesting the price may approach another likely peak or trough upon completion.
Recently, Aave completed the first phase of the TD Sequential with nine green candles, according to the chart shared by Martinez. This development indicates that Aave might have reached a potential top, at least from the perspective of this indicator.
This signal comes after Aave’s price witnessed a notable surge, outperforming the broader sector with a sharp 28% rally in the past week. Martinez’s chart also highlights four previous instances of this signal, each followed by a drawdown in Aave’s price. Historically, Aave has experienced an average decline of 27% following these signals, suggesting the possibility of another similar drop.
Adding some complexity to the situation, Aave’s network has seen a surge in activity. Data from the market intelligence platform IntoTheBlock shows that active addresses have reached their highest number in over a year, likely drawing increased attention following the price surge.
Following its remarkable rally, Aave has surpassed the $134 mark, indicating significant upward momentum in recent days.
