UniSwap’s native token UNI showed signs of bottoming out as its price rebounded by almost 56 percent in the previous 24 hours of trading.
The UNI/USD exchange rate surged from near $1.75 to as high as $2.74 in the said period. Nevertheless, the pair failed to hold the top for long amid growing profit-taking sentiment among traders. As a result, it corrected lower by more than 6 percent during the early Friday trading session in London.
UNI’s sharp retracement rally appeared alongside a similar bullish move in the Bitcoin market. On Thursday, the flagship cryptocurrency surged by more than 10 percent to [almost] hit $16,000, a level it last touched in January 2018 when it was correcting lower from its all-time high near $20,000.
Bitcoin’s immediate upside swing took cues from a string of optimistic macro fundamentals, ranging from the prospects of winning a stimulus-friendly US presidential candidate Joe Biden to the Federal Reserve’s vow to keeping interest rate near-zero and purchasing Treasury mortgage-backed securities endlessly.
UNI, on the other hand, rebounded almost without a concrete fundamental backing it. Many analysts agreed that the UniSwap token’s latest upside had more to do with technical catalysts, starting with traders’ expectations of a bounce-back after it declined almost 78 percent from its record high of $8.62 (data from Binance).
Meanwhile, another factor that explains UNI’s latest rebound is a Descending Channel pattern. As shown in the chart above, the UniSwap token was trading inside the said downward range as it fluctuated between its upper and lower trendlines.
On Thursday, UNI/USD tested the Channel support for a pullback towards its resistance – just below $2.20. The upside eventually matured into a breakout move, accompanied by a sharp increase in volume, and extended itself towards key resistance levels.
As a result, the price broke above $2.20, followed by $2.48. It eventually formed a local high near $2.71 before correcting lower towards the flipped support of $2.48.
What’s Next for UNI?
UniSwap traders now have three potential strategies for UNI as the price rejects further upside. First, a clear break below $2.48 could have them stretch their short targets towards $2.20. Second, a rally continuation could have traders open a Long position towards $2.71, with an extended upside outlook towards $2.93.
And third, a consolidation trend between the range defined by $2.48 as support and $2.71 as resistance could bound their positions. Thereby, a bounce from support opens a decent long opportunity towards resistance – and vice versa.