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Among the top 20 cryptocurrencies by market capitalization, Chainlink (LINK) is currently seeing the second highest loss of -10.4% over the last seven days. This puts it just behind Ethereum, which saw a slightly steeper decline of -10.9%.
Despite this, a glimmer of optimism appears when looking at the 1-day chart of LINK/USD. The analysis suggests a potential turnaround on the horizon. If the current market structure remains intact, there is a promising indication that LINK's recent corrective phase may be coming to an end.
Chainlink Price Analysis: Indicators to Watch
Several key indicators and patterns are emerging that deserve the attention of traders and investors. First, the price action demonstrated a series of higher lows, which could indicate the formation of an ascending triangle pattern – a bullish continuation pattern. As long as LINK price remains above the uptrend (black line) established in late October of the previous year, the bulls remain in control.
At press time, LINK was trading at $13.82, presenting a nuanced story in its positioning on the exponential moving average (EMA). A critical observation is that LINK price is dynamically positioned above the long-term 100-day and 200-day EMAs, recorded at $14.6679316 and $11.61, respectively. This pattern typically signals strong long-term bullish momentum, boosting investor confidence in the asset.
In contrast, the short-term outlook is conveyed by the positioning of the 20 and 50 day EMAs. With the 20-day EMA at $14.67 and the 50-day EMA at $14.58, both are hovering above the current price level, providing a potential resistance zone. This immediate resistance is indicative of a short-term downside pressure or consolidation phase, perhaps reflecting a pause in the market as traders and investors reevaluate their positions.
Fibonacci retracement levels from the June low to December high suggest that LINK recently tested the 0.236 retracement level at $14.70 as resistance. The next levels to watch are 0.382 at $12.85, followed by 0.5 at $11.53, which could serve as potential support levels in the event of a bearish reversal. Conversely, a break above the 0.236 level could open the door to a test of the $17.69 level, which constitutes important resistance.
In terms of volumes, commercial activity was moderate, with no significant spike indicating a decisive market direction. The relative strength index (RSI) is hovering around the 50 mark, which generally denotes neutral market sentiment with no clear overbought or oversold conditions.
The MACD indicator is exhibiting a bearish signal with the MACD line at -0.1407939, positioned below the signal line, which is at -0.1508732. The negative value of the MACD line suggests that the short-term momentum is weaker than the long-term momentum, indicating bearish sentiment in the current market.
Additionally, the distance between the MACD and the signal line is very narrow, as evidenced by the small histogram value of -0.0100794. This small negative histogram value indicates weakening bearish momentum, as the MACD line is about to move above the signal line.
Traders could view such a crossover as a potential change in momentum, possibly hinting at an upcoming bullish phase. However, until the crossover occurs, the prevailing sentiment indicated by the MACD remains bearish in the short term.
LINK/BTC: bulls under control
The LINK/BTC trading pair (weekly chart) also favors the bulls. The descending trendline, which has historically acted as resistance since the 2020 high, was crossed decisively in October last year. This breakout is a key development, indicating a potential reversal of the downtrend that has dominated the LINK/BTC pair for a significant period.
After the breakout, a retest of the descending trendline took place, a move often anticipated by technical analysts. The successful retest took place during the second week of January, when the price bounced off the trendline, strengthening it as a new support level.
This retest is indicative of a change in market sentiment, where old resistance levels are turning into support, a classic sign of a trend reversal. A break above 0.0004472 and LINK could explode towards 0.0006875 or even 0.0009.
In summary, Chainlink's technical posture is one of cautious optimism, with a clear upward trend since November but facing immediate resistance near the $14.70 level. Market participants should closely monitor these technical indicators for signs of a continuation of the uptrend or a potential reversal if support levels weaken.
Featured image created with DALL·E, chart from TradingView.com
Disclaimer: The article is provided for educational purposes only. It does not represent the views of NewsBTC on whether to buy, sell or hold investments and, naturally, investing involves risks. You are advised to carry out your own research before making any investment decision. Use the information provided on this website entirely at your own risk.
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