Uniswap (UNI) looks ready to post its best monthly performance in more than a year as it rallied approximately 80% in July, but signs of an extended pullback in the near term are emerging. 

Uniswap price nearly doubles in July

UNI’s price is having one of its best months ever, reaching nearly $9 on July 30 versus nearly $5 at the beginning of the month, best returns since January 2021’s 250% price rally. 

Merge FOMO an UNI “fee switch” proposal

Uniswap’s gains primarily surfaced due to similar upside moves in a broader crypto market. But they turned out to be relatively massive due to an ongoing euphoria surrounding “the Merge.”

Notably, the Ethereum blockchain’s potential transition from proof-of-work to proof-of-stake in September has triggered a buying hysteria among related toke.

$ETH move bringing the entire ecoystem with it.

Best movers:
•Defi: $LDO $UNI $BIT $AAVE
•Layer 2: $OP $MATIC

And of course because it’s crypto $ETC is the biggest pump. pic.twitter.com/hN9Rd6Yr9j

— Luke Martin (@VentureCoinist) July 27, 2022

Additionally, UNI may also have been drawing its gains from a so-called “fee switch” proposal.

Specifically, community governance system that oversees Uniswap has been discussing whether or not they should grant UNI holders the right to earn 0.5% commission from Uniswap’s 3% trading fees while rewarding the rest for liquidity providers.

if $uni turns on the fee switch its an easy top 10 coin in crypto

— moon (macro expert) (@MoonOverlord) July 29, 2022

UNI “rising wedge” still in play

From a technical’s perspective, UNI is now heading lower after testing $20 as its interim resistance.

It now eyes an extended pullback toward the upper trendline of its prevailing “rising wedge” pattern—around $8.

However, its price would risk falling even further if it lands back inside the pattern’s trading range, defined by two ascending, converging trendlines.

That is primarily because rising wedges are bearish reversal patterns.

They resolve after the price breaks below their lower trendlines. Meanwhile, their profit target are typically at length equal to the maximum distance between their upper and lower trendlineswhen measured from the breakdown point.

Related: DeFi’s downturn deepens, but protocols with revenue and fee sharing could thrive

In other wordsUNI’s price could fall toward $4.50 by September, down 50% from today’s price if the pattern plays out.

Conversely, a bounce back at or ahead of testing the rising wedge’s upper trendline could have UNI retest $10 as its interim resistance. In doing so, it could eye an extended upside move toward the $11.50-$17 range.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.