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.
Election Havens
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 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.
