UNI Price Analysis: Uniswap traders move out of the pennant, looking for a 10% drop

Uniswap (UNI) price action performs a clear break below the pennant formation that was marked up on the charts after what could have been a bear trap on Tuesday. Instead UNI traders are selling off as the Relative Strength Index (RSI) dips further. As other asset classes are confirming the risk-off tone, expect to see UNI slide below $4.80 by this weekend. 

Uniswap is undeniably on its way to testing the low of November

Uniswap price tanks near 2% this Wednesday morning in the ASIA PAC and European session after bears  breach through the lower ascending trend line of a pennant formation, in which price action has been trading since November. There was a chance that the break on Tuesday was a bear trap as bulls could trade back up to the ascending trend line. Instead, the support has been broken this Wednesday and price is set to tank further.

UNI traders will want to get out of the way to avoid being caught in the snowball move that will follow in the remaining days of 2022. Expect to see a nosedive towards $4.80 and a flirt with $4.73 as a new low since November could be made. Losses should be fairly contained at around 8%, with a big risk that now the next support only comes in at around $4.46, which is another 6% away, mounting up to nearly 14% of losses.

UNI/USD daily chart

A swing back up could still be possible, which would mean that the green ascending trend line will be tested and broken to the upside. Do not expect bold rallies that will be largely extended, but rather trade your positions quite contained. Expect to see a lot of profit taking and a broad fade once $5.60 is tested near the red descending trend line, confirming that the pennant is back in play.