Key Takeaways
Why did Uniswap prices rally so quickly earlier in the week?
Monday alone saw a 42% UNI move higher after a proposal of millions of UNI tokens burnt, which should reduce supply and reward token holders.
Does UNI give a “buy now” signal?
Long-term investors could enter now, but the likelihood of a deeper price dip was high, and traders and investors can also wait for this retracement to complete.
Uniswap [UNI] has made incredible progress on the price charts recently. The recent gains were a direct consequence of developments such as the UNIfication proposal on the 10th of November and UNI buyback plans.
Source: UNI/USDT on TradingView
On the 1-day chart, the DEX token regained its bullish structure after breaching the previous downtrend’s recent lower high at $8.6. The $6.88 level was also a key short-term level, but it posed little resistance during UNI’s move higher.
However, even though the price action was firmly bullish, the OBV hinted at caution. The buying volume that set the rally into motion has been opposed by severe selling pressure as the price climbed past $9.
The Fibonacci retracement levels showed that a price dip to $6.86 and $5.92 was possible.
Assessing the lower timeframe, Uniswap trend
Source: UNI/USDT on TradingView
Zooming in on the lower timeframes, the OBV’s descent became even more worrisome. The 1-hour chart showed that the OBV has been trending downward over the past 48 hours.
During this time, the $8.1-$8.5 demand zone has been flipped from support to resistance.
Even though the MFI showed bullish momentum and buying pressure in recent hours, it might not be enough to send UNI clear of the $8.6 resistance.
Therefore, there is a greater chance of a deeper retracement to the Fibonacci levels highlighted earlier.
Source: Coinalyze
The rising Open Interest (OI) and high funding rates on the 11th of November, alongside the UNI rally, showed strong short-term bullish conviction.
Since then, the OI has begun to falter, and the Funding Rate has fallen toward zero. It briefly declined into bearish territory in the past 24 hours.
There was also an increase in long liquidations. Therefore, the situation for UNI was a combination of long liquidations and longs closing their positions, at a profit or otherwise, leading to a depressed OI.
As things stand, the bears have an advantage and could drive a deeper price dip to $6.86.
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion
