Uniswap price could crash 30% as UNI forms a bearish swing failure pattern

Uniswap price shows a steady uptrend with higher highs and higher lows. While this outlook alone might instill confidence in a layman investor, a closer look reveals weakness. Market participants need to be cautious as a trend reversal could be brewing.

Also read: A crypto beginner’s guide to Nonfarm Payrolls and its effects on BTC

Uniswap price ready to take a U-turn

Uniswap price was rangebound between $4.95 and $6.34 levels from November 2022 to January 2023. From January 13, UNI kick-started its slow but steady uptrend that produced four higher highs and three higher lows. As a result, the altcoin inflated by 24% in under three weeks.

The most recent spike in buying pressure occurred on February 2, below the $7.22 hurdle. This development pushed Uniswap price up by 6.84%, but the twelve-hour candlestick closed below the aforementioned level, creating a Swing Failure Pattern (SFP). Such a move is a sign of manipulation to cull the early shorters or bears by pushing the asset above a crucial resistance level. 

In particular, this SFP is a bearish one and is proceeded by a trend reversal. Two other bearish SFPs can be seen on November 15 and December 2, 2022, where Uniswap price attempted to breach a strong resistance level at $6.34 but failed and produced a twelve-hour candlestick close below it.

Both these times, UNI dropped 20% and set up equal lows at $4.95. Now that Uniswap price has produced another bearish SFP, a correction to the immediate support level at $6.35 seems likely. Adding credence to this bearish outlook is the fact that this SFP is occurring inside a daily supply zone, extending from $6.81 to $7.77.

If the $6.35 structure breaks, the next crucial level is $5.74, which is roughly 20% away from the current position of UNI at $7.10. In a dire case, Uniswap price could sweep the equal lows at $4.95, signaling a 30% crash.

UNI/USDT 1-day chart

While the bearish outlook has sufficient backing, investors need to watch the nonfarm payroll announcement today closely. If this macro-event is positive, it could potentially trigger a rise in buying pressure for Bitcoin price and the altcoins as an extension, including Uniswap price. 

In such a case, if Uniswap price flips the demand zone’s upper limit at $7.77 into a support floor, it would invalidate the bearish thesis and potentially trigger a run-up to $7.96.