AAVE prepares for the back-test

After a sharp decline, AAVE formed a textbook spring, signaling that strong buying demand has returned to the market.

The recent bullish leg appears to have completed a 5-wave impulse structure (H4 timeframe), suggesting a high probability that a corrective phase may follow.

Currently, AAVE is testing the resistance boundary of its ascending channel. I’m looking for signs of an upthrust here, with two primary scenarios in mind:
Scenario 1: If the recent surge to $300 is confirmed as an upthrust, we could see a mild correction back to the $279 area for a support back-test—possibly forming a secondary spring within the rising channel (lower probability).
Scenario 2: If price wicks above $300 but then reverses, I anticipate a back-test at $289, which could set the stage for a new rally to break ATHs (targeting $325) and potentially reach the $370 area.

RSI is approaching overbought territory, but there’s no clear sign of a reversal yet. It’s crucial to watch for divergence signals at this stage.

Key Points:

AAVE is in a strong bullish phase, but a short-term pullback to retest the $279–$289 support zone could offer the optimal entry for the next leg up.

Risk management first: Keep stops tight below $275 to protect capital.