Uniswap [UNI]: Traders should watch out for this neckline resistance level

Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion

• The 4-chart was bearish at press time.
• Funding rates were positive; more liquidations of long positions.

Since dropping to a key demand zone on 21 April, Uniswap [UNI] hasn’t inflicted a strong rebound. Recent recovery attempts faced resistance at an obstacle near $5.57 – $5.66 (white zone). 

After that, UNI retested the demand zone, and a move up would chalk a double bottom pattern – a bullish formation with potential gains if the recovery is sustainable. 

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Conversely, UNI’s recovery could be undermined if Bitcoin [BTC] corrects sharply after the FOMC announcement on 3 May. 

However, if BTC maintains the $28k and surges in the next few hours/days, UNI could inflict a strong recovery. 

Recovery stalled; can bulls rise again?

Source: UNI/USDT on TradingView

UNI’s drop on 21 April left an imbalance and FVG (fair value gap) at $5.57 – $5.66 (white zone). UNI’s recovery attempts faced rejection at the above zone, prompting price action to retest the key demand zone of $5.228 – $5.507 (cyan). 

The demand zone is also a bullish order block on the daily timeframe. If UNI recovers and retests FVG, the price action will form a double-bottom pattern with the FVG as the neckline resistance level. 

Hence, a  confirmed uptrend continuation and a close above the FVG $5.67 could set the UNI to rally to the bearish order block at $6.5 – a 15% potential rally. 

Contrary to the above, sellers could gain more leverage if UNI closes below the demand zone level of $5.228. But the lower support levels at $4.950 and $4.710 could check any further plunge.

In the meantime, RSI and OBV dipped lower, reinforcing eased buying pressure amidst the ongoing FOMC meeting. 

Sentiment declined, but…

Source: Santiment

Read Uniswap [UNI] Price Prediction 2023-24

According to Santiment, funding rates have been fairly positive in the past few days – a steady demand which could boost a recovery. 

However, negative sentiment dipped lower at press time, reiterating an increasingly bearish outlook for the asset in the short term.

Moreover, the bearish bias is corroborated by liquidation data from Coinalyze. In the past 24 hours, long positions worth $45.8k were wrecked compared to $148 worth of short positions.