AAVE faces the risk of a double-digit fall as technical signals and on-chain data turn negative.

Aave (AAVE) is facing a strong wave of selling as bearish pressure continues to increase, in the context of prices returning to test the previously broken uptrend line. Signals from on-chain data and the derivatives market further reinforce the negative outlook, with the Taker Cumulative Volume Delta (CVD) falling into the negative zone, while the number of short positions has surged to its highest level in the past month. Technical Analysis also shows a bleak picture, putting AAVE at risk of entering a deep correction that could reach double digits in the short term.

On-chain data and Aave's derivative market indicate a bearish trend

Data from CryptoQuant, illustrated in the chart below, shows that selling pressure on Aave is significantly increasing. The Taker CVD (Volume Accumulation Spread) of AAVE has continuously decreased and remained in the negative zone since mid-July. This is an index that monitors the accumulation spread between buying and selling volume over a three-month period, reflecting the prevailing trend in the market. When the 90-day CVD is positive and trending upwards, the market often enters a "buy dominance" phase (Taker Buy Dominant Phase). Conversely, negative values and a downward trend indicate that the sellers are in control – a clear signal of the "sell dominance" phase (Taker Sell Dominant Phase).

Aave's Spot Taker CVD Chart | Source: CryptoQuantAt the same time, data from Coinglass shows that Aave's long/short ratio has fallen to 0.82 on Tuesday – the lowest level in over a month. A ratio below 1 indicates that market sentiment is leaning towards a bearish trend, as most traders are choosing to bet on the likelihood that AAVE will continue to fall.

AAVE long/short ratio chart | Source: Coinglass## Aave price forecast: The bears continue to maintain control

The price of Aave (AAVE) broke the upward trend line – formed by connecting the lows since the beginning of April – on Thursday, resulting in a 5% decline over the next two days. However, by Sunday, this coin found support at the (EMA) 200-day exponential moving average around the $242.27 mark and quickly bounced back. By Monday, AAVE had recovered 8.68%, returning to test the upward trend line that had just been breached. As of the time of writing on Tuesday, AAVE is trading slightly lower around $262.13.

If the correction continues, AAVE may revisit the 200-day EMA at $242.27. Closing below this important support level could open up additional selling pressure, pulling the price back deeper into the Fibonacci retracement zone at $225.64.

AAVE/USDT Daily Chart | Source: TradingViewThe Relative Strength Index (RSI) is currently at 40 – below the neutral threshold of 50 – indicating that the bearish trend is dominating the market. At the same time, the MACD indicator has also recorded a bearish crossover and this signal is still in effect, further reinforcing the bearish scenario in the short term.

However, if AAVE can recover and close above the resistance zone of $282.84 on the day, the uptrend is likely to be extended, with the nearest target being the peak on July 18 at $349.23.

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