Uniswap price analysis: Is the dip a buying opportunity?

• Updated

Uniswap could remain range-bound in the near term

Uniswap (UNI)                                 
Uniswap is reportedly looking undervalued in the long term according analytics platform Santiment – Photo: Getty Images
                                

After the sharp rally in July, Uniswap has been taking a breather in August. However, a positive sign is that the pullback has been shallow, indicating that the bulls are buying on minor dips. The price has bounced off the support of the range and the buyers are trying to sustain UNI above the 20-day exponential moving average (EMA) as of 17 August 2022.

Behaviour analytics platform Santiment said in a report this month that Uniswap was looking undervalued for the long term based on the 365-day MVRV, which shows the ratio between the current price and the average acquisition price of the token. The report highlighted that daily address activity soared above 1,100 active addresses per day, which “is generally a good validator that utility is backing up and 'justifying' the rising market cap”.

“It's also great to see that shark and whale addresses have been accumulating heavier and heavier percentages of Uniswap’s overall supply since May,” the report added.

In other news, Uniswap Labs’ former chief of staff Devin Walsh and Uniswap grant programme lead Kenneth Ng issued a proposal to create a Uniswap Foundation, which aims to “support the decentralised growth and sustainability of the Uniswap Protocol and its supporting ecosystem and community”.

The proposal has a budget of $74m out of which $60m will be used for the Uniswap Grants Program while the remaining $14m will be the operating budget to build a team of 12 members for three years.

Could strong demand from whales and sharks limit the pullback? Could Uniswap go up? Read the UNI price analysis to find out.

Uniswap price technical analysis: Weekly chart

Uniswap weekly price analysis chart for 17 August 2022
Uniswap weekly price analysis chart for 17 August 2022 – Credit: Currency.com

UNI’s price has been trading above the 20-week EMA for the past two weeks, but the bulls have failed to build upon this advantage. The UNI/USD pair formed a doji candlestick pattern last week, indicating indecision among the bulls and the bears.

The flattening 20-week EMA and the relative strength index (RSI) near the midpoint suggest a balance between supply and demand.

If the price slips below the 20-week EMA, the advantage could tilt in favour of the sellers. The pair could then decline to $6.21. 

Alternatively, if the price rebounds off the 20-week EMA, the bulls will try to push the UNI/USD pair above the psychological level of $10. If they succeed, the pair could start its northward march to the 50-week simple moving average (SMA).

Uniswap price technical analysis: Daily chart

Uniswap daily price analysis chart for 17 August 2022
Uniswap daily price analysis chart for 17 August 2022 – Credit: Currency.com

UNI’s price has been consolidating in a range between $7.95 and $9.78 for the past few days. When the price is stuck in a range, traders buy near the support and sell close to the resistance. 

The rectangle could either behave as a continuation pattern or as a reversal setup, depending on the direction of the breakout and the prevailing trend.

If the bears sink the price below $7.95, the pair could drop to the 50-day SMA. This level may again act as a strong support but if the bears pull the price below it, the decline could extend to the pattern target of $6.12.

Conversely, if the price bounces off $7.95, the bulls will again attempt to push the UNI/USD pair above the range. If they manage to do that, the pair could rally to the pattern target of $11.61.

Uniswap: Buy or sell this week?

Uniswap has been trading inside a range for the past few days. If the bears sink the price below $7.95, the pair could decline to the 50-day SMA and then to $6.12. On the other hand, if the price rebounds off $7.95, the pair could again attempt a rally to $9.78. Uniswap’s price analysis suggests that a break above $9.78 could open the doors for a rally to $11.61.

The views and opinions expressed in the article are those of the author and do not constitute trading advice. Trading and investing involve substantial risks and you should do your own research or contact your financial adviser before arriving at a decision.

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