Uniswap (UNI) looks poised to post its best monthly performance in over a year, rising roughly 80% in July, but signs of a prolonged short-term pullback are emerging.
Uniswap price almost doubles in July
UNI price is having one of the best months ever, hitting nearly $9 on July 30 vs. nearly $5 earlier in the month, the best performance since the 250% price rally in January 2021.
The merger FOMO a UNI “fare change” proposal
Uniswap’s gains arose mainly due to similar bullish moves in the broader cryptocurrency market. But they turned out to be relatively massive due to the euphoria surrounding “the Fusion”.
In particular, the potential transition of the Ethereum blockchain from proof-of-work to proof-of-stake in September has triggered buying hysteria among related tokens.
$ETH move bringing the entire ecosystem with it.
Best movers:
•Def: $LDO $UNI $BIT $AAVE
•Layer 2: $OP $MATICAnd of course because it’s crypto $ETC is the biggest pump. pic.twitter.com/hN9Rd6Yr9j
— Luke Martin (@VentureCoinist) July 27, 2022
In addition, UNI may also have been taking its profits from a proposal called a “rate shift.”
Specifically, the community governance system that oversees Uniswap has been discussing whether or not they should grant UNI holders the right to earn 0.5% commission from Uniswap’s 3% trading fees while rewarding the rest for liquidity providers.
if $uni turns on the fee switch its an easy top 10 coin in crypto
— moon (macro expert) (@MoonOverlord) July 29, 2022
UNI’s ‘rising wedge’ still in play
From a technical perspective, UNI is now heading lower after testing $20 as its intermediate resistance.
A prolonged pullback to the upper trend line of its prevailing “rising wedge” pattern is now expected around $8.
However, its price would be at risk of falling further if it fell back into the pattern’s trading range, defined by two converging, ascending trendlines.
This is mainly because rising wedges are bearish reversal patterns.
They are resolved after the price breaks below its lower trend lines. Meanwhile, your profit target is usually of a length equal to the maximum distance between your upper and lower trend lines, measured from the breakout point.
In other words, the UNI price could drop towards $4.50 in September, 50% lower than the current price if the pattern holds.
Conversely, a bounce off the upper trend line of the rising wedge, or prior to testing it, could see UNI retest $10 as intermediate resistance. If it does, you could see an extended move higher into the $11.50-$17 range.
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