Uniswap (UNI) price can double based on a classic technical pattern

Uniswap (UNI) price can double based on a classic technical pattern

Uniswap (UNI) market valuation could grow 100% in the second half of 2022, as it shows a classic bullish reversal pattern.

UNI bullish setup

Called an “inverse head and shoulders,” the technical pattern forms when price establishes three troughs in a row below a common support level (neckline), with the middle one (head) being deeper than the other two (shoulders).

Also, it resolves after the price breaks above the support level.

The UNI price trend since May 23 meets all the requirements to form an IH&S pattern, except for the right shoulder. A retest of its neckline near $5.71 would form the right shoulder, raising the possibility of an iH&S breakout scenario, as shown below.

Daily chart of the price of the UNI/USD pair with the IH&S pattern. Source: TradingView

As a rule of technical analysis, the price exiting an IH&S structure can go up as much as the maximum distance between the lowest point of its head and the neckline. Thus, the UNI IH&S upside target is around $9.78, which is more than 100% higher than the June 2 price.

Mixed Uniswap Price Signals

Uniswap’s longer timeframe charts draw attention to resistance levels that could prevent UNI from touching its IH&S pattern target.

This includes an interim resistance level around $6 that has rejected UNI price declines at least three times since May. A successful break above the $6 level could see UNI touch the February 2022 support around $7.52, the event of which preceded a 75% price rally to $12.48.

Read:  This is what the new Netflix animated series based on the legendary fighting saga looks like

The $7.52 level also coincides with the UNI 20-week exponential moving average (20-week EMA – the green wave on the chart below), now near $7.90.

Uniswap (UNI) price can double based on a classic technical pattern
UNI/USD 1-week candlestick chart. Source: Tradingview

Conversely, a decisive pullback from the $6 resistance level will lead to an unfavorable technical set-up, referred to as a “bear flag.”

UNI has already turned lower after testing levels around $6, which coincides with the upper trend line of the flag. This leaves the UNI/USD pair with two possible scenarios: decline towards the lower flag trendline near $3.92, or bounce for a possible break above the upper trendline.

Uniswap (UNI) price can double based on a classic technical pattern
UNI/USD 3-day price chart with the bearish flag pattern. Source: TradingView

UNI’s move towards $3.92 could trigger the bear flag breakout scenario, which would mean a drop of more than 45% to $2.75 from the price on June 2. On the other hand, a break above the upper trend line would invalidate the bear flag setup entirely.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should do your own research when making a decision.

Investments in crypto assets are not regulated. They may not be suitable for retail investors and the full amount invested may be lost. The services or products offered are not aimed at or accessible to investors in Spain.