- Uniswap risks losing a significant amount of the weekly accrued gains if support at $8 is shattered.
- UNI/USD pessimistic outlook will be validated if the sell signal on the 12-hour chart confirms.
Uniswap is ending the week in style despite Bitcoin’s uncertainty growing. BTC dived to $34,000 this week, hampering the expected rally to $40,000. The leading decentralized finance (DeFi) is up 12% on the day after establishing support at $8.
Uniswap is on the verge of retreat
At the time of writing, UNI/USD is trading at %$8.2 after holding firmly to $8. The recent upsurge hit a new yearly high at $9.5 stalled, allowing sellers to swing into control. Support at $8 must remain intact in the coming week. This will ensure that bulls hold onto the accrued gains.
However, the least resistance path appears to be downwards now that the Relative Strength Index is retreating from the overbought. Continues action toward the midline could mean that Uniswap will dive to the next critical support at the 50 Simple Moving Average on the 4-hour chart.
Uniswap is also trading at the apex of an ascending wedge pattern, suggesting that a reversal is in the offing.
The bearish outlook forms when an asset’s price ascends with pivot highs and lows while converging at a single point referred to as the apex. A breakdown usually occurs before the trendlines converge. The typical breakdown is mostly confirmed by decreasing volume (highlighting a divergence between volume and price). Breakdowns are generally fast and drastic.
UNI/USD 4-hour chart
The TD Sequential indicator presented a sell signal on UNI’s 12-hour chart, adding credence to the pessimistic outlook. The bearish formation developed as a green nine candlestick anticipating a one to four daily candlesticks correction.
A red two candlestick trading below a preceding red one candle could serve as confirmation that Cardano is poised to drop further.
If support at $8 holds, Uniswap is likely to gain ground toward $10. Thus, avoiding the downfall to $7 (50 SMA) altogether. Buyers also need higher support to plan for the next leg up.