The Aerodrome Finance token (AERO) is hovering around $1.10 after noting volatility over the past weeks. Bulls have been able to prevent a drop below $1.05. The technical, derivatives market, and ecosystem news indicate that AERO is gearing up to take the next big step.
A recent announcement by Aerodrome stated that it has reached record efficiency in its Bitcoin liquidity pool on the Base network. Statistics indicated that the pool earned slightly under three times the trading volume of a similar one (Uniswap pool). Also, this was done at half the liquidity. The result corresponds to an over tenfold higher efficiency than Uniswap.
Aerodrome stressed that its design enables liquidity providers to accomplish more with less capital. The volume over liquidity ratio was 2.27 on the Aerodrome as opposed to 0.22 on Uniswap.
Such a competitive advantage would bring more traders and capital to the Aerodrome. This is seen as an indicator of sustainable growth by market participants despite the declining volumes of other decentralized exchanges.
AERO can be seen moving around the price level at $1.10. This level is aligned with the Fibonacci retracement zones and VWAP levels. The strong short-term support is at 0.236, close to $1.09. Being above this is continuing to maintain a path of recovery.
VWAP levels are higher than $1.11, which supports this zone as a pivot. A breakout over $1.12 would lead to greater retracement horizons. The levels of importance to traders are the 0.382 (at a value of $1.13) and 0.618 at a value of $1.31. With any gathering of momentum, $1.22 is the near target level, while $1.31 is the golden pocket level.
A loss of the $1.09 to $1.10 band may bring the price back to around $1.05. That would cancel the bullish formation and cause further contraction to $1.00.
Fib. and VAWP. Source: TradingView
Also Read | AERO Plunges to $1.39 as Whale Pulls $2.89 Million Out
The RSI is at approximately 41, which is neutral to bearish. This means the selling pressure has slowed down, but buying conviction has not become strong yet.
After weeks of decline, the MACD is starting to flatten out. A bullish reversal has occurred as the blue line has crossed near the red signal line. If true, it would push the token to between $1.18 and $1.22. Momentum could stall, and this would cause the token to trade sideways around the level of $1.10.
MACD and RSI. Source: TradingView
Data on derivatives contributes to the argument in favor of taking a decisive step. As Coinglass notes, AERO futures volume has been above $75 million. The amount of open interest has increased by over 4% and now exceeds $76.7 million.
Traders tend to accumulate positions in expectation of a breakout when the open interest is rising and volumes are stable. If the long positions remain dominant, then AERO might soon retest the $1.20 level and rise further. But with an increase in shorts, the token may retest the support level of $1.05.
Source: Coinglass
The sharp rise in July, when AERO was trading below $0.80, to August levels that were above $1.60, indicated the market’s interest in these kinds of tokens. The pullback since then has reduced profits but hasn’t breached the next critical support level.
Traders who came early are still in profit and will likely protect key levels. The battleground in the short run will be the area between $1.09 and $1.12. Breaking past $1.12 might move the momentum back to the bulls, but breaking below $1.05 might invite more selling pressure.
Also Read | AERO Surges 2.2% as Bulls Gear Up for $2.36 Breakout
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