Navigating Uniswap Price Discovery


Uniswap, much like other Defi darlings 1-inch & Sushi, presents a high barrier to entry for retail crypto participants. They hear about Defi and know the names of exchanges/lenders, but don't participate anywhere near the level of CEXs. They also hear horror stories about rug pulls and high gas prices, which deters them even further.

Despite the tepid interest from mainstream retail, Defi has exploded onto the scene the past 18 months. People with high risk tolerances have seen impossible gains from airdrops and liquidity pools. For people with less risk tolerance, they can leverage trade Defi chips and enjoy the ride to a lesser, yet still incredible extent. Uniswap has been mooning in value since mid-November and is on its 11th day of (actual) price discovery with little end in sight. I say actual because the day it launched it traded at $15 for a very short time period.

On the chart we see a clear uptrend with candles riding between the upper band and EMA7. There is another trend of a short retraction after a high piercing wick(s). At the time of writing, it has some room between the upper band and candle wick, which I would expect to be filled shortly. What I'm really looking for is the ensuing retraction after this run subsides. I'm hoping for a wick to dip into the green box, which represents a strong support/fib level. I would expect an immediate shot up from any wick in that area. Alas, with the majors holding supports and printing bullish signs, I don't know that the price will dip to that level as the EMA has served well as support in the recent trend. So I will likely double up longs at $12.9x and in the green zone should it happen.

Do notice the tall volume bars peaking above the vol EMA . On a shorter time frame this would signal a retraction but on the UNI 4H chart, a similar volume bar kicked off a 40% run over two weeks.

This is not investment advice and trading cryptocurrency is high risk.

Comment: $12.9x didn't happen, $13 should be strong support going forward.
Trade active: Given the events surrounding $GME/$AMC/$NOK and others, I'm piling into Uni longs. Soon millions of traders will understand the underlying value of decentralization and will flock to mobile accessible platforms that are censorship resistant. Uni fits that bill. Currently a 7x margin would keep liquidation under the new $13 support level.

Also, I'd highly recommend looking into 1inch and Sushiswap as well.