Uniswap [UNI] has seen a significant surge in price, breaking out of a multi-week downtrend and reaching $6.90. This breakout has sparked hopes of a potential bullish reversal for the altcoin. The increased buying pressure has pushed UNI above a key descending resistance level, indicating a shift in momentum.
The recent price action is supported by technical indicators, with the Relative Strength Index (RSI) at 56 and rising volume suggesting growing bullish momentum. The breakout came after UNI reclaimed the 50-day Moving Average (MA) at $6.26, a historically significant level that now acts as support.
Chart analysis shows that the next key target for UNI bulls is the 200-day MA near $10.25, with immediate resistance at the volume node around $8.00. A close above $8.00 could pave the way for a move towards $12.24, a high last seen in January.
However, despite the positive price action, on-chain activity for Uniswap tells a different story. Daily active addresses have plummeted to 296, the lowest in over three months, according to Santiment data. This divergence between price and user activity raises concerns about the sustainability of the current rally.
Typically, a breakout accompanied by rising on-chain participation provides more reliable confirmation of sustained momentum. The current mismatch may indicate hesitation among network participants or a speculative-driven rally.
Looking ahead, UNI’s ability to hold above $6.90 and breach the $8.00 zone will be crucial in sustaining upward momentum. If on-chain activity recovers and more addresses interact with the network, it would strengthen the case for a continued rally towards $10 and beyond.
On the other hand, a failure to maintain the breakout level, especially if daily active addresses continue to decline, could result in a retest of the $6.20 support level. Bulls currently have the upper hand, but broader user participation is needed to solidify this breakout into a longer-term trend reversal for Uniswap.
In conclusion, while UNI’s price action is technically bullish, the altcoin will require increased user participation to support the current rally and establish a sustainable uptrend. Stay tuned for further developments in the Uniswap market as the altcoin navigates through these critical levels.