Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be taken as investment advice
At a time when most cryptos were registering gains on the back of Bitcoin’s gradual recovery from late-July lows, the same could not be said for Uniswap. While the alt did move within an uptrend till mid-August, its trajectory soon lost pace. This was evident from its monthly ROI which stood at 1.8%, the lowest among the top 10 cryptos.
On the chart, a few bearish patterns accounted for steep losses. While UNI’s near-term outlook remained unfavorable, focus can now shift to a crucial support that could stop the bleeding. At the time of writing, UNI was trading at $26.5, down by nearly 12% over the last 24 hours.
Uniswap 4-hour chart
While UNI began August on a positive note, a rising wedge setup, double top formed at $30 and a descending triangle pattern triggered breakdowns ranging from 8%-13%. The latest decline was aggravated by short sellers as UNI closed below its 4-hour 200 SMA for the first time in over a month.
However, what was common in all these retracements was the defensive zone of $24-$24.5. Not only did the aforementioned zone alleviate downwards market pressure, but also served as a base for minor rallies throughout August.
A close eye must be maintained on this zone going forward as well. On the other hand, an extended sell-off would drag the price to monthly lows of around $23.3
Meanwhile, UNI’s indicators did not fare too well. The MACD threatened to move below the half-line – An event that triggered some additional selling in the market. The Awesome Oscillator grew in length below the half-line as momentum rested with sellers.
Interestingly, the Relative Strength Index moved within the oversold zone and there were some chances of an immediate reversal. In such a case, UNI would need to close above $27.2 to realize sharper gains.
Since sellers were in total control of the UNI market, a lot boils down to the defensive region of $24-$24.5. The aforementioned zone has crunched multiple drawdowns and the same can be expected over the coming sessions as well.
However, traders must avoid longing UNI in such a situation. A better call would be to take up short positions in case UNI closes below the $24-mark.
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