Uniswap analysis: UNI price could double based on classic technical analysis model
UNI needs to break above a key technical resistance level to trigger a bullish scenario, which can cause the price to rise by 100%. Otherwise, a bear market flag means a 45% price decline.
The market valuation of Uniswap (UNI) could rise by 100% in the second half of 2022, as the price chart shows a classic trend reversal pattern.
Possible increase in UNI price
Called the “inverted head and shoulders (IH&S)”, the technical configuration will take a committing shape when the price forms three consecutive lows below a common support level, with the middle one (head) being deeper than the other two (shoulders).
In addition, the formation takes shape after the price breaks above the support level.
The UNI price trend since May 23 has tested all the boxes for the formation of the IH&S formation, except for the right shoulder. A retest of the “neckline” near $5.71 would form the right shoulder, increasing the likelihood of an IH&S breakout scenario, as shown below.
According to the principle of technical analysis, the breakout price from the IH&S structure can rise even by the maximum distance between the lowest point of the head and the “neckline”. Thus, the upside target of UNI IH&S is around $9.78, which is more than 100% higher than the June 2 price.
Conflicting price signals on the Uniswap chart
The longer timeframe Uniswap chart highlights resistance levels that could keep UNI from reaching its IH&S target.
This includes a transitional resistance level around $6, which has rejected at least three times UNI’s price low since May. A successful breakout above the $6 level could see UNI face support at around $7.52 in February 2022, a test of which preceded a 75% price rise to $12.48.23.
The $7.52 level also coincides with UNI’s 20-week exponential moving average (20-week EMA; green wave on chart below), currently near $7.90.
Conversely, a strong pullback from the $6 resistance level could result in a bearish technical setup, called a “bearish flag.”
UNI is already back to lower levels after testing around the $6 level, which coincides with the upper trendline of the flag. This leaves the UNI/USD pair with two potential scenarios: a decline towards the lower trendline of the flag near $3.92 or a bounce to potentially break out above the upper trendline.
A move by UNI towards $3.92 would risk triggering a bear flag breakdown scenario, which implies a 45% plus decline to $2.75, measured from the June 2 price. On the other hand, a breakout above the upper trendline would completely invalidate the flag setup.
It is worth mentioning that quite bullish scenarios are drawn on many cryptocurrencies which may show the weakness of the theory about possible big declines in the coming weeks.