Aave Is Showing A TD Sequential Sell Signal Right Now

In a new post on X, analyst Ali Martinez has discussed about a Tom Demark (TD) Sequential signal that has taken shape in AAVE's 1-day price chart

Aave (CRYPTO: AAVE) has been rallying over the past week, outperforming the rest of the cryptocurrency market with gains of around 28%.

Now, one analyst has pointed out how the coin is forming a bearish pattern that led to significant drawdowns the last four times it occurred.

A TD Sequential Sell Signal Is Currently Active On Aave

In a new analysis post on Substack, analyst Ali Martinez discussed a Tom Demark (TD) Sequential sell signal that has recently appeared in AAVE’s 1-day price chart.

The “TD Sequential” is a popular technical analysis (TA) indicator that is commonly used to try and identify potential points of reversal in the price of an asset.

The indicator functions in two phases. The first of these is the setup, where candles of the same polarity (either red or green) are counted up to nine. When these nine candles complete, the asset is said to have reached a point of trend exhaustion.

Naturally, if the candles leading up to the setup’s completion were green, then the TD Sequential will print a sell signal. Conversely, nine red candles would suggest a potential pivot to the upside.

The second phase, the countdown, begins once the setup is complete. This phase works much like the first one, except for the fact that candles are counted until thirteen here, not nine. Once these thirteen candles are also in, the price can be assumed to have arrived at another likely top or bottom.

As the analyst’s chart shows, Aave has recently completed the first of these TD Sequential phases.

The chart shows that AAVE has recently printed a TD Sequential setup of nine green candles, suggesting that the coin may have reached a potential top, at least according to the indicator.

This TD Sequential signal comes as the cryptocurrency has seen its price rally sharply over the past week, outperforming the rest of the market.

Past Pattern Points To Aave Price Drop

In the chart, Martinez also highlighted the previous four instances of the asset forming this signal. As can be seen from these, each of them was followed by a drawdown in the coin’s price.

More specifically, AAVE went on to register an average drop of 27% following the appearance of these signals.

Given this past pattern, it’s possible that Aave could end up seeing another similar decline this time as well.

In some more positive news, Aave has been seeing a lot of activity on its network as of late, according to data from the market intelligence platform IntoTheBlock.

It seems that the price surge has attracted a large amount of attention to the asset, with the total number of active addresses reaching its highest in over a year.