With the broader market recovering, Uniswap (UNI) has shown bullish momentum, making a strong comeback after falling below $3.
Earlier, UNI fell to a four-month low of $2.8. However, as the market showed signs of recovery, UNI successfully defended $3 and reached a high of $3.5 before a slight pullback.
At the time of writing, UNI was trading at $3.49, up 9.2% on the daily charts. During the same period, market capitalization rebounded above $2 billion.
Uniswap buyers are buying the dip
After UNI rose above $3, investors entered the market with conviction and attempted to avoid further declines. This sentiment was widespread in the spot market, where buyers rushed to get a discount.
CryptoQuant data showed that Uniswap recorded 3.8 million UNI in exchange outflows on February 6. At press time, outflows stood at 234,000 UNI, a significant decrease from the previous day.
Source: CryptoQuant
As outflows dominated the market, net foreign exchange flows remained negative. Between February 6 and 7, Uniswap recorded a net net flow of -$6.5 million, confirming higher outflows.
Along with this, the buyer versus seller strength indicator on Tradingview has confirmed this market trend. Buyer strength skyrocketed to 89 before dropping to 29 at press time.
Source: TradingView
The surge of buyers has pushed the market to recover from recent losses. At the same time, the dip buyer cashed out, raising the seller’s strength to 70 at press time.
These market conditions showed fierce competition between buyers and sellers for control of the market.
UNI at the crossroads, where to start?
Uniswap rebounded from the recent decline as buyers stepped in and bought the dip. However, the upward momentum slowed as sellers stepped in and cashed out, while buyers’ appetite waned.
These market conditions suggest an ongoing battle for market control between buyers and sellers. For now, although buyers have shown strength, sellers remain active.
In fact, the bearish momentum remains intact, as evidenced by momentum indicators. For example, the altcoin’s Directional Movement Index (DMI) has fallen to extreme oversold levels at the time of writing, while its negative index has increased significantly.
Source: TradingView
An ADX rising while +DI is falling indicates strong downward momentum with sellers overwhelming the market. Therefore, recent attempts by buyers have proven insufficient to support a trend reversal.
These conditions therefore suggest the continuation of the dominant trend. If sellers continue to dominate, UNI is likely to fall again towards $3.0.
For a trend reversal, buyers need to push the daily close above the 20 EMA at $4.2, thereby prompting the market to move above $4.9.
Final Thoughts
- UNI rebounded from a four-month slide and jumped to a local high of $3.5 before a slight pullback.
- Uniswap rallied as buyers rushed to buy the dip, but the bearish structure remained stubbornly intact.
