- Uniswap headed to greener pastures today after a significant correction.
- Since the February low, volume has not been complimentary to the recent uptrend.
- Relative Strength Index (RSI) shows declining momentum.
Uniswap price is spiking, putting UNI in the top-ten performing cryptocurrencies today with a 13% gain. Moreover, the SuperTrend indicator has registered a buy signal. These are bullish developments, but they could be just background noise to a larger bearish pattern unfolding.
Uniswap price advance today could be a fake-out
Uniswap has been a highlight in the cryptocurrency space in 2021 after climbing almost 600%. The price action during this March decline has been corrective, but the volume trend since the February low has been declining, showing a lack of commitment. Even with today’s massive gain, the daily volume is running at a third of the 50-day simple moving average (SMA).
Standing front and center on the charts is a developing ascending wedge. It could just be a correction in a dominant uptrend, or conversely, it could be an alert that a major top is about to be printed. If it is an ascending wedge and based on a rough pattern projection, Uniswap price should briefly make a new high around $36.53 before reverting downwards.
Alternatively, Uniswap price could continue to drift higher, making marginal new highs until mid-April when the pattern reaches its apex, which coincides with the 1.382 extension level of the February crash at $38.65.
As drawn on the chart below, initial support is at the lower trendline at $31.63, and if it fails to entice buyers, UNI could collapse to the 50-day SMA, which would be around $26.20. The next significant support does not emerge until the February 23 low at $18.20.
UNI/USD daily chart
The chart’s bias is tilted to the downside. Still, if the wedge does resolve to the upside, the potential gains will be limited to a test of the 1.618 Fibonacci extension at $42.15, representing a 24% gain from the current price.
The reward exceeds the risk in the short-term, but the risk is much more significant from a macro perspective.
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