Uniswap dips below critical price level – Are more shorting gains likely?
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
- Uniswap’s bearish structure saw sellers flip a critical price level from support to resistance.
- Negative funding rates and declining Open Interest suggested a continuation of bearish bias.
Uniswap [UNI] sellers extended their dominance with a strong bearish break below the $4.34 support level. After breaking out of a compact range at the end of August, bulls put up a staunch defense of the critical support level to ease the selling pressure.
Realistic or not, here’s UNI’s market cap in BTC terms
However, the defense was short-lived with sellers forcing a 7.9% dip to flip the $4.34 level to resistance. A continuation of Bitcoin’s [BTC] oscillating price action between $25.7k and $28.4k could see UNI sellers bid for sub-$4 prices.
Bears seize control of critical price level
The $4.34 support level has been a vital price zone for bulls. The last significant bullish rally for Uniswap came from the level in mid-June. August saw a reversal of almost all the gains from the June-July bullish run. However, bulls were expected to stand their ground when price approached the $4.34 level.
Despite the best efforts of buyers, as evidenced by the bullish candles between 1 September to 9 September, the selling pressure overwhelmed the bullish pushback. This emphasized the bearish dominance on UNI’s current price action.
Investors responded by limiting capital inflows with the Chaikin Money Flow (CMF) remaining in negative territory. Similarly, the Relative Strength Index (RSI) continued to move under neutral 50, highlighting the absence of sufficient buying pressure.
A retest of the new resistance level could see sellers target new profit levels at $3.65 to $3.90. On the flip side, if bulls are able to quickly reclaim the $4.34 level, medium gains can be found between $4.60 to $4.80.
Read Uniswap’s [UNI] Price Prediction 2023-24
Bearish sentiment evident in futures market
The derivatives market was firmly bearish at press time, according to data from Coinalyze. UNI’s Open Interest rate continued to dip along with price, reinforcing the bearish bias.
Similarly, the funding rate fluctuated over the past week. However, it was negative, as of the time of writing. This suggested a mass of short positions amidst the extended bearish market sentiment.