UNI’s pullback is heading towards a critical confluence of the December bullish order book area and May support, which could make this area a key bullish stronghold.
UNI’s Pullback Has Hit Key Bullish Zone
Strong sell signal based on liquidation data
Uniswap’s [UNI] could offer a risky buying opportunity on higher timeframe charts. Bulls faltered after breaking above the June high and touching $5.8. However, the pullback has eased into a critical confluence of a bullish order block and the May support area — which could offer a re-entry position for bulls if BTC sustains above $30,000.
As of this writing, BTC is priced at $30,180, having hit new highs in Q2/Q3 2023 over the past few days as the hype around the ETF dissipates.
Will this bullish zone save the bulls?
At the peak of the UNI rally in late June, bulls cooled, causing UNI to fall back to May support near $4.95. The pullback was marked by a block of bullish orders between $4.75 and $5.1 (cyan), making May support a bullish stronghold.
A positive price reaction in the bullish zone, especially if BTC does not drop below $30k, could offer a buying opportunity targeting the recent high at $5.8. However, cautious traders could set $5.5 as the primary target, with both setups offering >2 RR (risk reward).
A break below the bullish zone will invalidate the above bullish thesis. A breakdown of this zone could further depreciate UNI to $4.5 or $4.0.
Meanwhile, the Relative Strength Index (RSI) dipped below the neutral level of 50; suggesting some easing of buying pressure. Likewise, Chaikin money flows shifted south, exacerbating the decline in capital inflows.
Discourage additional long positions
According to Coinglass liquidation data, UNI saw more long positions destroyed on July 10. For example, over $170,000 worth of long positions were liquidated during the same period, while short positions were less than $10.
This trend reinforces the bearish sentiment and calls for caution among bulls. Investors should track BTC price action for better clarity and direction.