Uniswap gets rejected at $6.6 – Should traders brace for a deep pullback?

Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.

•  Uniswap saw a rejection from the highs of a near six-month range.
• A pullback beneath $5 was a scenario traders should be prepared for

Uniswap [UNI] was reported to see its Uniswap X cross the aggregate trading volume of $1 billion. This pointed toward increased demand for open-source trading protocols by market players. It also saw a surge in developmental activity.

The metric was so high that it was ranked second in the DeFi sector in terms of development activity in recent days. Uniswap also aimed to cut gas fees to attract more users, with v4 making plans to make swapping and creating pools cheaper.

The near six-month range was still relevant for UNI

Source: UNI/USDT on TradingView

Uniswap prices saw a strong bounce last month. The bulls forced gains of 71.8% in just under forty days to drive UNI from $3.845 to $6.6. In the past few days, Uniswap prices were dented slightly and traded at $6.2 at press time.

The one-day price chart was healthily bullish. The swift gains from $4.9 to $6 left a large fair value gap that could be filled in the coming days or weeks.

The Fibonacci retracement levels (pale yellow) also agreed with this idea. They showed that a deeper pullback to the $4.9 level, which is the 61.8% retracement level, could be expected.

At press time, the market structure and momentum were firmly in favor of the buyers. The On-Balance Volume (OBV) struggled to breach a local resistance, but the Chaikin Money Flow (CMF) pointed to strong capital flow into the Uniswap market.

The indicators were bullish, can the same be said of on-chain metrics?

Source: Santiment

The mean coin age saw a huge drop in mid-October. It began to recover and trend higher later that month but was nowhere close to the September highs.

This suggested that, despite Uniswap price appreciation, the network-wide accumulation was weak. On the other hand, the rise in active addresses could help explain the increased demand for the token.

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The MVRV ratio was at a value last seen in late July, 2022.

This meant that increased selling pressure from holders taking profits on their UNI possessions was a strong likelihood. This could lead to a deep retracement.