Chainlink Bulls Must Uphold This Critical Support Line For Potential 8% Rally

At present, Chainlink (LINK) continues to witness further losses, with the altcoin experiencing a decline of nearly 7% in the past 24 hours. This depreciation has led LINK to touch its lowest point in several months, primarily driven by the overall weakness observed in the broader market.

On the weekly chart, LINK has lost approximately 4% of its value. Although there has been a slight recovery from the nearest support, the technical analysis of LINK still suggests a bearish outlook. Demand and accumulation indicators have also declined on the chart.

As Bitcoin begins to recover, moving back into the $26,000 range after a drop into the $25,000 zone, altcoins have also initiated their respective recovery processes. However, the sustainability of this recovery relies on the return of demand and buying confidence in the market.

Related Reading: Ethereum Price Regains Strength But Key Downtrend Resistance Intact

For LINK to experience significant price growth, it needs to surpass its overhead resistance level. Since encountering strong resistance at the critical level of $8.70, bears have dominated the market, resulting in intensified selling pressure and the breaking of significant support levels. Currently, the market capitalization of LINK remains low, indicating a lack of buyers in the market at the time of writing.

Chainlink Price Analysis: One-Day Chart

Chainlink was priced at $6.17 on the one-day chart | Source: LINKUSD on TradingViewAt the time of writing, Chainlink (LINK) was trading at $6.17. As Bitcoin rebounded to the $26,000 level, LINK also experienced a bounce from its support level of $6. The immediate overhead resistance for the altcoin was $6.36.

If this resistance level is surpassed, Chainlink could potentially reach $6.70, leading to a significant rally of 8%. However, it’s worth noting that prevailing market weakness could still cause LINK to depreciate further at the time of writing.

In such a scenario, a drop from the current price level would bring the coin to $6, followed by $5.60. If the bulls manage to defend the price at $5.60, it could pave the way for LINK to rise above the $7 level. The volume of LINK traded in the last session was in the red, indicating a lack of strong buying strength in the market.

Technical Analysis

Chainlink noted a downtick in buying strength on the one-day chart | Source: LINKUSD on TradingViewDue to the prevailing low buying confidence, demand for Chainlink (LINK) has remained low. This is evident as the Relative Strength Index (RSI) is below the half-line, indicating that sellers are dominating the market at the time of writing.

Moreover, LINK has fallen below the 20-Simple Moving Average (SMA) line, signaling a downtrend and sellers are driving the price momentum, further reinforcing the bearish sentiment in the market.

Chainlink formed sell signals on the one-day chart | Source: LINKUSD on TradingViewIn addition to other technical indicators, Chainlink (LINK) has displayed sell signals on the chart. The Moving Average Convergence Divergence (MACD) indicator, which indicates price momentum and changes, formed red histograms associated with sell signals for the altcoin. This suggests a bearish outlook for LINK.

The Directional Movement Index (DMI) also supports the downtrend, with the -DI line (orange) positioned above the +DI line (blue)Furthermore, the Average Directional Index (ADX), represented in red, moved above the 20-mark, indicating that the price trend is gaining strength.

Featured Image From UnSplash, Charts From TradingView.com