Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer's opinion
- The extended drop below $5 saw UNI shed over 20% in value.
- The Open Interest rates remained low, with UNI below $5.
Since 18 August, Uniswap [UNI] has failed to close above $5 on the daily chart, giving the leeway for further depreciation. However, the drop hasn't exceeded $4.5 as bulls turned it to immediate support.
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In the meantime, Bitcoin [BTC] saw a price rejection at $26.8k, making it a new resistance level. If BTC fails to clear the new resistance in the next few days, UNI's struggles below $5 could be extended.
Can bulls reclaim $4.94?
Source: UNI/USDT on TradingView
The Relative Strength Index (RSI) was negative, denoting elevated selling pressure. In addition, the Chaikin Money Flow (CMF) attempted a northbound movement but was below the threshold, indicating little capital inflows.
The above readings illustrated sellers' conviction in the market. The drop from mid-August ($6.3) to below $5 has depreciated UNI by over 20%. But sellers have had difficulty cracking the $4.5 immediate support while bulls could not cross $4.94, the last hurdle to reclaim $5.
Thus, the bearish market structure makes the asset ripe for shorting upon a retest of $4.94, with a take-profit target of $4.5.
But a daily candlestick close above $5.00 will invalidate the bearish bias. Such a move will set UNI to aim at $5.425 or $5.80.
Open Interest rates dipped
Source: Coinalyze
The massive interest and demand for UNI in the derivatives sector in early August has steadily disappeared. As demonstrated by the dropping of Open Interest (OI) rates, the metric has dipped from around $80 million in early August to <$50 million in the past few days.
How much are 1,10,100 UNIs worth today?
The liquidation data further confirmed the bearish inclination in the derivatives market. According to Coinalyze, there were more short liquidations ($49k) than longs ($13k) in the last 24 hours before the time of writing.
The liquidation data underscores a solid bearish bias, which could further make reclaiming $5 in the next few days difficult.
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