The Uniswap token UNI could dip below $2.00 if bulls fail to break above a descending resistance line
UNI is among the DeFi tokens that have registered heavy losses over the past few weeks, and continue to struggle under increased sell-off pressure.
It is a combination of the heavy downward pressure and a slowdown in the DeFi space that has seen every attempt at an upside so far end as soon as it starts. In the process, bears have taken control and pushed the token’s price past several support levels.
At the time of writing, the price of UNI against the US dollar is $2.08. With the outlook largely bearish, UNI/USD could sink lower if the downtrend sees it break below $2.00.
UNI/USD risks sinking lower
UNI traded at a high of $8.6 in mid-September but has mostly moved lower since. A brief upside in early October fizzled out, with the price remaining within a descending resistance line since.
Uniswap’s governance token is currently bound within a regressing parallel channel as shown in the 4-hour chart below.
UNI/USD 4-hour price chart. Source: TradingView
The RSI is also suggesting a continuation of the bearish formation as it flips negative having recently suggested a bullish divergence.
Currently, the price is below the 10-day and 50-day simple moving averages, a bearish outlook that might mean an extended rot past the psychological area around $2.00.
If we look at the Fib levels, the 38.2% Fibonacci retracement level provides immediate support at $2.07. Another support level is at the 23.6% Fib level near $2.02.
But a lack of any horizontal support below these initial areas means that an extended breakdown below the lower boundary of the descending parallel channel is likely.
If the bears succeed in breaching the area, coupled with increased sell-side pressure, the next support level could be at $1.94, with $1.50—$1.30 and the psychological $1.00 providing the next refuge for bulls.
Conversely, if the prices manage to hold above $2.07, an uptick to the 50% Fibonacci retracement level and the 50-SMA could encourage the bulls. From here, the buyers can target breaking above the 78.6% Fib resistance level at $2.22 before attacking $2.40.
Uniswap’s inability to put together any meaningful upside also came as the decentralised exchange platform recorded a reverse in trading activity over the past month. Although it remains the market leader with about 70.3% of the volume share, data shows a $4 billion slide between September and October.
According to market data from Dune Analytics, the platform experienced a slide in monthly trading volume, down from over $15 billion in September to about $11 billion last month.
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