- UMA eyes rebound to the 50 SMA after bouncing off descending triangle support.
- Bulls are relative in control, as observed by the RSI changing direction to the north.
UMA established support at $5.8 at the beginning of October and commenced an upswing that hit highs above $12. Unfortunately, the impressive rally was unsustainable. Bears took control, forcing UMA on a downward spiral.
High support resting on the $7 level saw bulls regain balance. However, the price action was constrained in a descending triangle pattern. At the time of writing, UMA/USD is trading at $7.3 after a rebound from the triangle's x-axis. If gains continue and the crypto steps above the triangle's hypotenuse, we can expect UMA to begin the rally to $8.
UMA/USD 4-hour chart
The Relative Strength Index (RSI) also doubles down on the increasing bullish grip. The uptrend seems sustainable, especially if the RSI breaks above the descending trendline. Above the triangle, the 50 Simple Moving Average (SMA) and the 100 SMA in the 4-hour timeframe might delay recovery.
The TD Sequential indicator has flashed a buy signal on the 12-hour chart, giving credence to the uptrend. An increase in buy orders could potentially result in a rally to the crucial resistance at $10. However, it is essential to note that the 50 SMA may delay the price action around $8.
UMA/USD 12-hour chart
The lack of substantial resistance up to $8 also validates the bullish outlook, as shown by IntoTheBlock's IOMAP model. It is relatively smooth sailing until the price hits the barrier at $8.10-$8.31. Here, 187 addresses previously purchased nearly 1.1 million UMA.
UMA IOMAP chart
On the downside, support highlighted between $6.8 and $7 would absorb most of the selling pressure in case of a reversal. Previously, 137 addresses purchased approximately 331,000 UMA in the range.
Looking at the other side of the fence
It is worth mentioning that UMA's transaction volume, which aggregates all the transactions on the network, has gone down significantly from the peak of roughly 490,000 UMA on October 9. According to Santiment, the transaction volume has declined to approximately 85,000 UMA at the time of writing.
UMA transaction volume/daily active addresses chart
Simultaneously, a dip in the daily active addresses shows that UMA is experiencing a downtrend in network growth. A correlation between the daily active addresses and the transaction volume illustrates the possibility of prices either stalling or resuming the downtrend. In other words, as long as the two metrics fall side by side, the discussed bullish outlook may be invalidated.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.