AAVE at the Cliff Edge: Liquidity Sweep Near 240 Sets Up a Mean-Reversion Bounce

Executive summary

• Bias next 24h: Mildly bullish mean-reversion inside a broader short-term downtrend.
• Primary plan: Fade the morning/liquidity sweep towards 239–240 and ride a bounce into 248–251 supply.
• Rationale: Intraday AB=CD symmetry completes at ~241; price pressing a visible liquidity shelf (239.8) beneath which stops reside; hourly momentum oversold, price near/under lower Bollinger on intraday, and anchored VWAP from 10/10 capitulation sits overhead as a magnet/resistance near 250–252.

1. Market context and recent tape

• Regime shift: AAVE broke a multi-week 300±15 range after the 10/10 crash day (extreme low print 109.7, close 226.3). That event reset volatility, widened ranges, and displaced moving averages far overhead.
• Post-crash behavior: Dead-cat bounce to 262.8 (10/13 high), then a controlled bleed: 255.4 close on 10/14 and now 241.5 intraday on 10/15, making lower highs and lower lows on hourly—classic bearish market structure, but momentum already stretched near a near-term support shelf.
• Liquidity map (intraday 10/15): Lower-low sequence from 262→256→251→245→242→241 with a notable local low at 239.78. This sets up a likely stop-run/liquidity sweep just below 239.8 before a reflexive bounce.

2. Price action by timeframe

• Daily: The spill on 10/10 produced an expansion candle with very high range. Subsequent days: rebound to 262.8, then two red sessions (10/14 close 255.4; 10/15 intraday 241.5). Daily structure remains below broken 270–290 range—broader trend down. However, after a capitulatory expansion, it’s common to see mean reversion attempts as volatility decays.
• Hourly: Since 10/15 08:00 spike to 262.1, supply stepped in repeatedly. The move to 241–242 came with waning follow-through and small-bodied candles—often the prelude to either a sweep lower (to clean late longs) or a base for bounce. Micro swing lows cluster at 241.0 and 239.8.

3. Moving averages (approximations from daily closes)

• 20D SMA ≈ 285–290, 50D SMA ≈ 300, 200D SMA ≈ 300+ (all above price). Bearish alignment (price < 20 < 50 < 200) confirms broader downtrend and defines overhead resistances/magnets.
• Implication: Trend-following MAs argue rallies into 255–270 are sell zones. For 24h, being far below the 20D and after a sharp intraday dump, a short-term reversion toward nearer-timeframe means (e.g., hourly VWAP/Kijun) is likely before any further trend continuation.

4. Momentum and oscillators

• Daily RSI (est.): Low-to-mid 30s post-crash, rising toward low 40s on the rebound, now curling back. Not deeply oversold but not strong—neutral-bearish.
• Hourly RSI: Pressed toward 30 with minor positive divergence (price making marginal new low into 241 while RSI stabilizes). Divergences in a post-capitulation regime often resolve with a bounce.
• MACD daily: Below zero; histogram turned up during the bounce, now rolling over—weak. Hourly MACD: deeply negative, flattening—setup for a short pop.
• Stochastics hourly: Likely sub-20 and attempting a cross up—supports a tactical bounce.

5. Volatility and ranges (ATR, Bollinger)

• ATR(14) daily: Inflated by 10/10, but ex-outlier suggests 20–30 typical range. The 10/15 intraday swing from 262→241 ($21) fits that.
• Daily Bollinger Bands: Expanded on 10/10; price again leaning toward the lower band as of 10/15—mean reversion expectancy increases.
• Hourly Bollinger: Price probed/pierced lower band around 241; reversion toward the 20-hour MA (roughly mid- to high-240s) is probable, with upper band near 250–252 acting as cap.

6. Volume, participation, and profile

• Volume spikes: 10/10–10/11 had outsized volume—capitulation and forced flows. Since then, volumes moderating but still above pre-crash levels.
• Volume profile (recent): High activity nodes around 250–256 (post-bounce distribution), lighter liquidity 242–246. Expect mean reversion to the high-traffic node near 250 first, with heavier supply there.

7. Support/resistance map

• Nearby supports: 241.0 (intraday pivot), 239.8 (session low), 234–235 (10/11–10/12 area), 226.3 (10/10 close). Below 239.8 is a stop pocket likely to be probed once.
• Nearby resistances: 245.5 (intraday pivot), 248–251 (supply shelf), 255–256 (hourly Kijun/MA confluence), 262–263 (10/13 high area), 270–275 (old range floor now resistance).

8. Fibonacci and harmonics

• Fib from 10/10 low (109.7) to 10/13 high (262.8): 23.6% pullback sits ~226.5; 38.2% ~204.0; current 241.5 is still above the 23.6% retrace—this is a shallow correction of the initial post-capitulation bounce, which often maintains a buy-the-dip bias while above 226–227.
• Intraday AB=CD: A=262→B=247 (−15), C=256→D=241 (−15). Symmetry completes around 241—common inflection zone for a reactionary bounce.

9. Ichimoku (qualitative)

• Daily: Price below cloud; span A/B well above. Kijun (baseline) likely ~255; Tenkan nearer 250. Conclusion: Bearish overall but with a Kijun/Tenkan magnet above—often visited on mean reversion after fast drops.
• Hourly: Price below cloud; Tenkan/Kijun above 245–250. Short-term pullback rally into the base of the cloud/Tenkan zone is typical before trend decides next leg.

10. VWAP and anchored VWAP

• Session VWAP (intraday 10/15): Likely above spot after the selloff—magnet near mid/high 240s if bid returns.
• Anchored VWAP from 10/10 capitulation: Estimated around 250–252 given rebound volumes; acts as first major test on any bounce; expect sellers there.

11. Candles and micro-structure

• 10/14 daily: Long lower tail with close well above the low—demand showed up sub-240.
• 10/15 hourly: Sequence of lower highs with diminishing candle bodies from 245→241; final prints show indecision near prior low—often a pre-sweep pause.

12. Risk, positioning, and likely path over next 24h

• Base case (55%): Early dip/sweep through 239.5–239.8 to trigger stops; swift reclaim of 240→244; grind to 248–251 into supply/anchored VWAP; stall below 252.
• Bear case (30%): 239.5 fails on retest; momentum accelerates to 234–235; weak bounce to 240–242; close sub-240.
• Bull extension (15%): Strong reclaim 245 and sustained bid drives through 251; quick tag of 255–256 (Kijun/MA confluence) before supply caps.

13. Synthesis of tools

• Trend/MAs/Ichimoku: Bearish higher timeframe—sell rallies bias.
• Momentum/RSI/MACD/Stoch: Short-term oversold—bounce bias.
• Volatility/Bollinger/ATR: Expanded downside, at/through lower bands—mean-reversion probability elevated.
• VWAP/Volume profile: Magnet at 248–252; expect that zone to be tested if 239–241 holds.
• Patterns/Fibs/Harmonics: AB=CD completes at 241; shallow retrace of the post-crash bounce above 23.6% favors reactionary buyers above 226–227.

Conclusion: For the next 24 hours, favor a tactical long from 239–241 into 248–251, with the understanding that 250–252 is a logical area to take profits and reassess (likely re-sell zone if trend resumes down). Broader swing context remains bearish under 255–262.

14. Trade parameters (tactical)

• Position: Buy (Long) on a limit near 240.2 to catch the sweep/liquidity test below 241.
• Target (take profit): 250.8, just in front of 251 supply and anchored VWAP resistance.
• Suggested risk (not part of order fields, but prudent): Stop ~236.8 (below sweep zone and under 10/11–12 intraday micro-levels). R:R ≈ (250.8−240.2)/(240.2−236.8) ≈ 10.6/3.4 ≈ 3.1x.

15. Contingencies

• If no sweep and price impulsively reclaims 245 with rising volume, conservative traders may chase a smaller size pullback into 244–245 with the same 250–251 target (reduced R:R).
• If 239 fails and price knifes to 234–235, wait for a fresh base before reattempting longs; below 234, risk of a slide toward 226 grows, invalidating the mean-reversion setup for the next 24h.

24-hour price forecast envelope

• Expected range: 239.0–251.0 (base case), tails to 234 (bear) and 255 (bull extension) less likely.
• Time sequence (most probable): Early stop-run to ~239.5, rebound through 244–246, test 248–251 by late session/next session handoff, then stall.

Bottom line: Tactical buy-the-dip for a rebound to 250–251, then step aside or flip bias back to sell-the-rip if the broader downtrend reasserts under 255–262.