Uniswap [UNI] Breaks Key Resistance Level, Sparking Hope for Upside Potential Toward $8 Amid Mixed User Activity Signals

• Uniswap [UNI] has recently flipped a key descending trendline, setting the stage for a bullish push toward the $8 mark.

• This significant price movement marks a breakout from a multi-week downtrend, suggesting a potential reversal in sentiment among traders.

• According to a recent COINOTAG report, “The token’s resurgence may hinge on its ability to sustain momentum amid declining active user participation.”

Uniswap [UNI] has broken key resistance levels, sparking bullish sentiment; however, declining active addresses could challenge the sustainability of this trend.

A breakout backed by momentum

Uniswap is currently trading at $6.90, representing a 3.21% gain over the past 12 hours. Most notably, it broke through a descending channel pattern that has constrained its price movement since early February. This breakout comes after the altcoin reclaimed the critical 50-day Moving Average (MA) at $6.26, a level that has historically acted as a resistance-turned-support zone.

Source: TradingView

From a technical perspective, Uniswap’s Relative Strength Index (RSI) is at 56.03, indicating that bullish momentum is increasing but remains below overbought levels. Furthermore, the volume profile is noteworthy, showing a significant uptick in trading activity around the breakout point, which reinforces the strength of this upward movement.

The next significant target for bullish traders is the 200-day MA, situated near $10.25. Meanwhile, immediate resistance is identified at the volume node around $8.00; a close above this threshold could catalyze a run toward $12.24, marking a high last observed in January.

Uniswap active addresses fail to confirm enthusiasm—yet

Despite the encouraging price action, the on-chain activity presents a contrasting narrative. As reported by Santiment, Uniswap’s daily active addresses fell to 296 as of March 24, the lowest level in over three months. This divergence between price action and user engagement might generate caution among market participants.

Source: Santiment

Typically, an effective breakout is confirmed by increasing on-chain activity, which adds credence to the bullish narrative. The current disconnect could indicate a lag in user confidence or suggest that the recent surge is predominantly driven by speculative trading rather than genuine market interest.

What next for UNI?

While Uniswap’s current price action exhibits bullish characteristics, maintaining a position above $6.90 and successfully breaking through the $8.00 resistance zone will be crucial for sustaining this upward momentum. If on-chain metrics improve and more users engage with the platform, it could solidify the pathway toward $10 and possibly higher. However, if the price fails to hold above critical support levels, particularly with continued declines in daily active addresses, it may necessitate a revaluation of the situation and a potential retest at the $6.20 support level.

At this juncture, bulls hold a favorable position, yet a sustained trend reversal will require broader user engagement to affirm the breakout’s longevity.

Conclusion

In summary, while Uniswap’s technical outlook suggests a positive progression, the decline in active addresses signals a need for caution. Market participants are advised to monitor both price movements and on-chain metrics closely to gauge the likelihood of a more sustained bullish trend.