UNI faces potential 15% correction as overbought RSI and long liquidation risks mount

Important highlights

• Uniswap retreated after hitting an intraweek high near $10.95.
• UNI's weekly RSI has moved into overbought territory around 73.
• A correction could aim for $7.83, and losing that support may expose $6.91.

Over the coming weeks, Uniswap (UNI) could decline toward $7.80 after its latest rally stalled near a key resistance area.

An overbought weekly RSI, a rejection at the $11.51 Fibonacci level, and a cluster of leveraged long positions below the market all point to an elevated risk of a correction.

On September 25, UNI traded around $9.11 after reaching an intraweek high of roughly $10.95. Although its longer-term technical outlook has improved, the token may need further cooling before another sustained move higher.

UNI Rally Loses Steam Below $11.50

Uniswap's recent rebound pushed the price close to the 0.786 Fibonacci retracement level at roughly $11.51. That zone had been a key upside target after UNI broke above a long-term descending resistance trendline.

However, the token did not convincingly reach or break that level. Sellers appeared around $10.95, driving the price back toward $9.11 and leaving a prominent upper wick on the developing weekly candle.

A long upper wick typically indicates that buyers pushed the price higher during the period but could not hold those gains. While this does not guarantee a reversal, it suggests selling pressure has increased near the recent high.

This rejection is especially notable because it happened near major Fibonacci resistance. Unless UNI can reclaim the $10.95-$11.51 range, traders may see the latest move as a failed breakout rather than the start of another sustained rally.

Overbought RSI Signals Higher Correction Risk

Momentum indicators also suggest Uniswap's advance may be becoming extended. UNI's weekly RSI has risen to around 73, above the traditional overbought threshold of 70.

An overbought RSI does not automatically signal an imminent sell-off. During strong trends, cryptocurrencies can remain overbought for prolonged periods while prices keep rising. Nonetheless, UNI's past sharp weekly rallies have often been followed by consolidation or multi-week corrections as traders lock in profits.

The mix of a high RSI, resistance around $11.51, and the recent upper wick makes a short-term retreat more likely.

The first major downside target is the 200-week exponential moving average at about $7.83. A drop from $9.21 to that point would amount to a correction of roughly 15%.

Should buyers hold the $7.80-$7.85 zone, UNI might create a higher low and get ready for another try at $11.50. Losing that support, however, would expose the 100-week EMA near $6.91.

Notwithstanding these short-term risks, Uniswap's overall chart looks more robust than at the start of the year. UNI remains above several key weekly moving averages and has broken a long-term descending resistance line. Consequently, a drop to $7.83 could serve as a support retest instead of the beginning of a major bearish turn.

Derivatives positioning adds another source of downs ide pressure. CoinGlass data shows a significant cluster of leveraged long positions around $8.87 on Binance's UNI/USDT market.

Approximately $5.16 million in liquidation leverage is concentrated near that price. A decline in UNI to $8.87 could trigger an estimated $10.35 million in cumulative long liquidations.

When a leveraged long gets liquidated, the exchange automatically sells the underlying asset to close the position. If numerous positions are forcibly closed over a brief span, that selling pressure can speed up the drop and cause additional liquidations at lower levels.

This situation makes $8.87 a potential liquidity attraction. A small pullback to that level could turn into a steeper decline if forced selling overpowers existing demand.

The liquidation heatmap also highlights short-position liquidity above the current price, so a sudden rally could still produce a short squeeze. However, the bigger concentration of at-risk longs just below the market makes the near-term downside risk more urgent.

Could UNI Stage a Recovery Toward $11.50?

Uniswap's next directional step likely hinges on buyers' ability to defend the $8.87 liquidity zone and the firmer technical support near $7.83.

Successfully holding these levels would maintain the improving weekly structure and set UNI up for another challenge at $11.50. A clear weekly close above that resistance would undermine the correction narrative and could pave the way for higher objectives.

On the other hand, a liquidation-triggered drop below $8.87 would raise the chances of a descent to the 200-week EMA at $7.83. Should that level also fail, the 100-week EMA around $6.91 would become the next important downside target.

At present, UNI's long-term recovery is still intact, but overbought momentum and crowded leveraged positions indicate that volatility—and possibly a 15% correction—might occur before further upside.