Uniswap (UNI) looks ready to post its best monthly performance in more than a year as it rallied approximately 80% in July, but signs of an extended pullback in the near term are emerging.
Uniswap price nearly doubles in July
UNI’s price is having one of its best months ever, reaching nearly $9.00 on July 30 versus nearly $5.00 at the beginning of the month, best returns since January 2021’s 250% price rally.
Merge FOMO an UNI “fee switch” proposal
Uniswap’s gains primarily surfaced due to similar upside moves in a broader crypto market. But they turned out to be relatively massive due to an ongoing euphoria surrounding the Merge.
Notably, the Ethereum blockchain’s potential transition from proof-of-work (PoW) to proof-of-stake (PoS) in September has triggered a buying hysteria among related toke.
Additionally, UNI may also have been drawing its gains from a so-called “fee switch” proposal.
Specifically, the community governance system that oversees Uniswap has been discussing whether or not they should grant UNI holders the right to earn 0.5% commission from Uniswap’s 3% trading fees while rewarding the rest for liquidity providers.
UNI “rising wedge” still in play
From a technical perspective, UNI is now heading lower after testing $20 as its interim resistance.
It now eyes an extended pullback toward the upper trendline of its prevailing rising wedge pattern—around $8.00.
However, its price would risk falling even further if it lands back inside the pattern’s trading range, defined by two ascending, converging trendlines.
That is primarily because rising wedges are bearish reversal patterns.
They resolve after the price breaks below their lower trendlines. Meanwhile, their profit target is typically at length equal to the maximum distance between their upper and lower trendlines when measured from the breakdown point.
In other words, UNI’s price could fall toward $4.50 by September, down 50% from the price on July 30 if the pattern plays out.
Conversely, a bounce back at or ahead of testing the rising wedge’s upper trendline could have UNI retest $10 as its interim resistance. In doing so, it could eye an extended upside move toward the $11.50-$17 range.
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