UNI targets $10 after UniswapX launch sparks an inverse head and shoulders breakout, fueling bullish momentum in the DeFi trading space
A potential inverse head and shoulders breakout is forming on the daily chart, and UNI is exhibiting early symptoms of a bullish reversal.
In the past 24 hours, Uniswap experienced a growth of over 20%, reaching an intraday high of $7.6 on May 29, nearly 57% higher than its April low. Additionally, its market capitalization increased to approximately $4.4 billion, as per data from crypto.news.
In the interim, its daily trading volume increased by over 200% to surpass $1 billion. The derivatives market followed suit, as open interest increased by 20% to a record $514 million, indicating a surge in leveraged long positions.
The majority of traders are typically in a position to make further profits when funding rates are favorable.
The technical aspects indicate that there is additional potential for
UNI is on the brink of more enduring gains from a technical perspective, as it has broken out of numerous bullish patterns on the daily chart.
On Thursday, UNI emerged from an inverse head and shoulders pattern and verified the move with a bullish engulfing candle. The 20-day and 50-day moving averages have recently formed a golden cross, which is generally considered a buy signal, further supporting the bullish case.
The price of UNI has also surpassed a multi-month downtrend of lower highs and lower lows, thereby clearing a critical resistance zone. The SuperTrend indicator has also shifted to a bullish position and is presently situated below the price, which serves as an additional indicator of potential future gains.
The inverse head and shoulders pattern indicates a potential increase to approximately $10, which is approximately 37% higher than current levels if this breakout persists. Additionally, the target is aligned with the 61.8% Fibonacci retracement level, underscoring its significance.
A significant bullish factor that contributed to the recent rally in UNI is UniswapX. This new feature is intended to optimize each swap by routing it through the most viable source.
It enables multiple fillers to compete to provide users with the most favorable price, utilizing both on-chain and off-chain liquidity. UniswapX has generated substantial interest in the DeFi sector by eliminating the necessity for batching and introducing competitive pricing.
The momentum has been further bolstered by the substantial accumulation of UNI by large investors, also called “whales.” The number of addresses that possess between 10,000 and 1 million UNI has recently increased, as indicated by data from Santiment.
This type of accumulation typically shows an increase in confidence among institutional investors, which can frequently result in a price increase.
A short-term retreat remains feasible.
Despite the bullish drivers and robust technical setup, there is still a critical resistance level to monitor at $7.87. This level represents the 78.6% Fibonacci retracement and could serve as a temporary obstacle, potentially resulting in a minor pullback or consolidation before the subsequent upward movement.
On the other hand, the current bullish breakout pattern may be rendered invalid if UNI falls below $6.5. In that event, the price may retrace toward $5.81, which aligns with the 50-day simple moving average and could serve as a critical support level for purchasers to reenter the market.