Bulls have successfully defended Uniswap’s $4.95 support level. However, long-term investors will have to wait a while before making their next move.
Uniswap [UNI] did not have a bullish bias. The bulls had bravely defended the $5 support level. It was also a significant level from a psychological perspective.
Since the sellers had the upper hand, traders could look for opportunities to follow the broader trend. A move higher in the $5.3 region could offer such an opportunity.
A Bearish H12 Breakout Impedes Progress and Buying Pressure Is Easing as Well
The market structure on the 12-hour chart was firmly bearish for Uniswap. This proved that traders can look for short-selling opportunities. The last 10 days have seen low trading volume, but the On Balance Volume (OBV) showed that even then, sellers were the dominant force.
The OBV had formed lower highs in the past three weeks. The Relative Strength Index (RSI) was also moving below the neutral 50 mark, to show bearish conditions. However, with the RSI threatening to make higher highs, with the price making lower highs since December 19, a bearish divergence could develop in the coming days.
This would reinforce the bearish pressure behind UNI. It was already trading below the 12-hour bearish limit in the region of $5.26-$5.43.
A retest of this area could offer a nice risk-reward shorting opportunity. Meanwhile, a session close above $5.43 would indicate that the bulls may push toward the $5.82-$5.88 area.
The Fibonacci retracement levels showed that until the $6.6 level was broken, the trend of the higher time frame would remain bearish. However, this does not rule out minor moves upward. Long-term buyers can wait for a move back above $6.6, before testing the market once more.
Median Age of Coin and MVRV Ratio Are Hit to Highlight the Strength of Sellers
Data from Santiment showed that Uniswap’s network growth was muted over the holiday season. However, it remained above the growth observed in October. The drop in the 30-day Market Value to Realized Value (MVRV) ratio meant shorter-term holders profited at the $6.3 mark. The asset was undervalued, according to the MVRV metric, but it does not guarantee a buy signal by itself.
The coin’s median age of 90 days also plunged during the selloff in early December. This described a burst of token movement between addresses and could be due to seller activity. In recent days, although the metric has risen, it did not show a consistent upward trend at press time. Accumulation in the next week or two could precede a price rally.
By Audy Castaneda
