After a prolonged downtrend, Uniswap [UNI] finally broke above a key descending resistance level

After a prolonged downtrend, Uniswap [UNI] finally broke above a key descending resistance level, sparking hopes of a potential bullish

Uniswap price is finally breaking out. After a prolonged downtrend that saw the altcoin struggling to maintain $6, it broke above a key resistance level.

As the breakout occurred, it was accompanied by increased buying pressure, which could push UNI towards higher resistance levels if the trend continues.

Uniswap breaks out of descending channel

Uniswap was trading at $6.90, up 3.21% over the last 12 hours. More importantly, it broke out of a descending channel pattern that had capped price movement since early February.

This breakout came after the altcoin reclaimed the 50-day Moving Average (MA) at $6.26, historically a key resistance-turned-support level.

Uniswap price chart (Credit: TradingView)

From a technical standpoint, the Relative Strength Index (RSI) reading of 56.03, at press time, suggests growing bullish momentum but not yet overbought territory. Moreover, the volume profile shows a significant spike in activity near the breakout zone, reinforcing the move’s strength.

The next key target for bulls is the 200-day MA near $10.25, while immediate resistance lies at the volume node around $8.00. A close above $8.00 could accelerate a move toward $12.24, a high last seen in January.

Uniswap active addresses fail to confirm enthusiasm—yet

Despite the positive price action, on-chain activity has not responded similarly. According to Santiment data, Uniswap’s daily active addresses dropped to 296 on the 24th of March—the lowest in over three months.

This divergence between price and user activity could raise short-term caution.

Uniswap's daily active addresses fell to 296 today, the lowest since December 2022. 🛕 A breakout with lower lows in user activity usually spells doom for a trend continuation.

https://t.co/6Q859q9684pic.twitter.com/gA8L0u0L0Z

— Santiment (@santiment_) March 24, 2024

Typically, a breakout accompanied by rising on-chain participation provides more reliable confirmation of sustained momentum. The current mismatch may signal hesitation among network participants or a speculative-driven rally.

As such, while the technical breakout is promising, persistent low levels of active addresses despite the price move might indicate potential difficulties in sustaining the rally.