DeFi tokens are experiencing a collective rebound, and many leading tokens are beginning to hit new highs

As total value locked rises to new all-time highs, DeFi protocols are starting to make a comeback. Now, Aave, Uniswap, and yEarn Finance are back in the spotlight after losing out to Bitcoin’s previous rally.

DeFI's total locked value hits a record high | Source: DeFipulse

DeFi tokens have been weakening over the past two months as Bitcoin surged, but are now making a comeback. Aave, Uniswap, and yEarn Finance are leading in terms of gains.

Aave flashes sell signal after 120% surge

Aave experienced a massive surge in demand on November 5, which saw its price surge by more than 120%. This DeFi token rose from a low of $26.4 to a high of $59 in four days. Despite the huge gains in such a short period of time, the price may be ready to retrace.

Technical indicators once again suggest that Aave is ready to decline. The TD Sequential indicator has issued a sell signal in the form of a red nine candlestick on the 12-hour chart of AAVE. This bearish formation estimates that an increase in downside pressure could trigger a daily one to four candlestick correction before the uptrend resumes.

AAVE/USD chart on TradingView

IntoTheBlock’s “In/Out of the Money Around Price,” or IOMAP model for short, shows that there are no significant demand barriers that can prevent the lending protocol token from falling further. Based on this on-chain metric, the only area of ​​​​significant interest is between $45.6 and $42.6, where approximately 770 addresses previously purchased 3.15 million AAVE.

This barrier may have the ability to absorb some of the selling pressure that has emerged in the near term. Holders within this price range may start buying to prevent the price from deteriorating further. However, if Aave breaks this layer of support, the price could plummet to $31.6.

IntoTheBlock’s IOMAP Model

On the other hand, the IOMAP model shows that the cryptocurrency is trading below stable resistance. Nearly 300 addresses bought approximately 4.7 million AAVE between $55.5 and $56.2.

Only a candlestick close above this key supply level can invalidate the bearish outlook and lead to further gains.

Uniswap is on top of a giant support level

Uniswap appears to have reached a market bottom on Nov. 5, with charts showing increasing buying pressure since then. Over the past four days, the cryptocurrency has gained more than 68% — but the bullish impulse appears to have been curbed by the 200-day moving average on the 4-hour chart.

Although the price has successfully tested this key resistance area over the past few days, it has been trading higher so far.

UNI/USD Trends on TradingView

IntoTheBlock’s IOMAP shows that about 1,800 addresses bought 6.7 million UNI at prices between $2.87 and $2.95. Therefore, only if demand surges can this DeFi token convert the 200-four-hour moving average into support, confirming that the price will rise to $3.3 or higher.

IntoTheBlock’s IOMAP Model

It is worth mentioning that Uniswap sits on top of a huge supply barrier that may have the strength to prevent bulls from losing control of price action. The IOMAP cohort shows that more than 4,000 addresses previously bought 40 million UNI at $2.4.

If a pullback occurs, this support area could absorb some of the selling pressure to prevent the DeFi token from falling further.

yEarn Finance’s future is unclear

yEarn Finance appears to have entered a period of consolidation after surging by nearly 143% in recent days.

The stagnant price action seems to have resulted in the formation of a symmetrical triangle on its hourly chart. A downtrend line is formed along with the swing highs, while an uptrend line is formed along with the swing lows.

By measuring the distance between the initial high and low of the chart and adding it to the breakout point, the symmetrical triangle suggests a target of 23.5%. The increased buying pressure behind this cryptocurrency could see it trading around $19,000.

YFI/USD Trends on TradingView

Although symmetrical triangles can form a continuation trend, they can also form a reversal uptrend. For this to happen, the DeFi token must break the support trendline at $14,000. IntoTheBlock’s IOMAP shows that at this price level, more than 1,000 addresses hold nearly 10,500 YFI.

While this massive area of ​​interest could see the price continue to fall, a break below it could result in a drop of more than 20% towards the $11,000 support level.

IntoTheBlock’s IOMAP Model

The symmetrical triangle is directionally ambiguous, which means traders must wait for confirmation before entering a position. A candlestick closing above or below the trendline will provide a better idea of ​​where yEarn Finance is headed next.

DeFi market rebounds collectively

As global financial markets assess the impact of a potential COVID-19 vaccine, the total value locked in DeFi protocols continues to hit new all-time highs. Despite the huge losses incurred in the past two months, such high interest in this crypto sector suggests that it has greater room for growth.

Aave, Uniswap, and yEarn Finance appear to have reached a market bottom on November 5 — and now, investors are getting greedy. Overall, the three cryptocurrencies are expected to recover their lost ground and seek higher highs.

While this appears to be the case, as shown in previous analysis, data shows that the segment could see several corrections as Bitcoin surges.

Therefore, investors must keep a close eye on the different support points mentioned earlier. As long as AAVE, UNI, and YFI can stay above their respective demand barriers, the bullish outlook will continue. Otherwise, a sell-off may be triggered, which will shake out the weak before the uptrend resumes.