Uniswap (UNI) market valuation could grow by 100% in the second half of 2022 as it paints a classic bearish reverse pattern.
UNI price bullish arrangement
Called “reverse head and shoulders (IH&S),” the technical arrangement is formed when the price forms three troughs in a row below a common support level (neckline), with the middle (head) deeper than the other two (shoulders).
Additionally, it resolves after the price breaks above the support level.
The UNI price trend since May 23 should check all boxes to form an IH&S pattern, except the right shoulder. A retest of its neckline near $ 5.71 would form the right shoulder, increasing the possibility of an iH&S breakout scenario, as shown below.
As a rule of technical analysis, the price bursting from an IH&S structure can increase as much as the maximum distance between the lowest point of its head and the neckline. So, UNI’s high-end IH&S target is around $ 9.78, more than 100% of today’s price.
Conflicting Uniswap price signals
Uniswap’s longer-term charts draw attention to resistance levels that could prevent UNI from reaching its IH&S target.
That includes a temporary resistance level of around $ 6, which has pushed the price of UNI lower at least three times since May. A successful break above the $ 6 level could have UNI face the February 2022 support of around $ 7.52, whose test preceded a 75% price accumulation to $ 12.48.23.
The $ 7.52 level also coincides with UNI’s 20-week exponential moving average (20-week EMA; the green wave in the chart below), now near $ 7.9.
Conversely, a decisive withdrawal from the $ 6 resistance level could trigger a result in a bearish technical setup, called a “bear flag”.
Related: Finance Redefined: Uniswap goes against the bearish trends, surpasses Ethereum
UNI has already returned lower after testing levels around $ 6, which coincides with the flagship uptrend. That leaves the UNI / USD pair two possible scenarios: a decline to the lower trend of the flag near $ 3.92, or a rebound for a possible break above the uptrend.
UNI’s move to $ 3.92 would risk triggering the scenario of collapse of the bear flag, which means a decrease of 45% more to $ 2.75 when measured from today’s price. On the other hand, a break above the upper trend line would completely invalidate the flag setting.
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