Uniswap (UNI) is trading around $7 on Friday after rising 8.5% on Thursday and breaking out of an ascending triangle pattern. The bullish breakout is further supported by UNI daily active addresses, which have reached a new all-time high, while the transaction flow balance has shown a negative spike, all of which hint at an impending rally.
Uniswap is expected to rise after breaking out of the ascending triangle pattern
The pattern was created by drawing two trend lines starting from August 2, connecting the swing points between two higher lows and multiple equal highs on the daily chart. A breakout of this technical pattern is favorable for bulls, and targets are generally obtained by measuring the distance from the first daily high and the first daily low to the breakout point. As of this writing on Friday, it is trading slightly higher at around $7.36.
If it retests the breakout level and finds support near the weekly resistance at $7.06, UNI could rally by 35% to retest its technical target of $9.38. Investors should be cautious with this theoretical move as it could face a slowdown at the Uniswap daily resistance at $8.19 and could book profits at $8.19.
The Relative Strength Index (RSI) on the daily chart is trading above the neutral level of 50 and pointing upward towards 63. A crossover above the 60 level typically indicates that bullish momentum is building. However, traders should remain cautious as the index approaches the overbought level of 70.
Artemis’ daily active addresses data, which tracks network activity over time, paints a bullish picture for Uniswap. A rise in the metric indicates increased blockchain usage, while a drop in addresses suggests a drop in demand for the network.
Taking UNI as an example, daily active addresses rose from 796,700 on September 4 to 1.5 million on September 20, reaching a new all-time high. This shows that demand for the use of the Uniswap blockchain is increasing, which is a good sign for the Uniswap price.
Additionally, Santiment’s Exchange Flow Balance also provided bullish signs for Uniswap. This metric shows the net flow of Uniswap tokens in and out of exchange wallets.
A rise in the metric indicates that more UNI is entering exchanges than exiting, suggesting selling pressure from investors. Conversely, a fall in the metric indicates that more UNI is leaving exchanges than entering, suggesting less selling pressure from investors.
In the case of UNI, this metric fell from 321,030 to -2.06 million between September 17 and September 19. This drop indicates growing investor confidence as holders removed Uniswap tokens from exchanges and stored them in cold wallets.
However, the bullish thesis will be invalidated if the weekly support at $7.06 fails to hold and Uniswap price turns down and closes below the Sept. 16 low of $6.30. Such an advance would extend the decline by 11% and retest the Sept. 1 low of $5.54.
