AAVE is flashing a rare technical signal on Monday, with its Relative Strength Index plunging to 21 — a level that typically marks severely oversold conditions. The cryptocurrency, which has been sliding for weeks, now sits just above key support at $61, and some traders are positioning for a short-term bounce toward the $75 resistance zone.
RSI at 21: A Rare Oversold Reading
The Relative Strength Index, a momentum oscillator that measures the speed and magnitude of recent price changes, has dropped to 21 for AAVE. Readings below 30 are generally considered oversold, and a move to 21 signals extreme selling pressure. Historically, such low RSI levels have often preceded a technical bounce, though the recovery is usually short-lived rather than the start of a sustained uptrend.
At current levels, AAVE is trading well below its 50-day and 200-day moving averages, confirming the bearish trend that has been in place since early March. The drop accelerated last week as broader crypto markets faced headwinds from regulatory uncertainty and profit-taking after a strong first quarter.
Support at $61, Resistance at $75
Technical analysts point to $61 as a critical support level. If AAVE holds above that price, the oversold RSI could fuel a relief rally. The first major upside target is $75, a level that previously acted as support in February before breaking down. A move above $75 would require additional buying momentum, which is not guaranteed given the current market sentiment.
On the downside, a break below $61 could open the door to further losses, with the next support zone around $55. However, the extreme RSI reading suggests that sellers may be exhausted in the near term, making a bounce the more likely scenario.
Short-Term Recovery, Not a Trend Reversal
Despite the oversold signal, the broader outlook for AAVE remains cautious. The current positioning points to a short-term recovery rather than a sustained bullish shift. Without a catalyst — such as a protocol upgrade, partnership announcement, or broader market turnaround — the bounce could fizzle out quickly.
Trading volumes have been elevated during the sell-off, which often indicates panic selling. Once that pressure eases, buyers may step in to take advantage of discounted prices. But the same volume could turn into resistance if those buyers quickly take profits near $75.
The coming days will determine whether the oversold reading leads to a meaningful rebound or simply a pause in the downtrend. Traders are watching the $61 support closely, with a close below that level likely to trigger further selling.
