Chainlink (LINK) Price Plummets Following Rejection at Long-Term Resistance: Is the Uptrend over?
The price of Chainlink (LINK) has been rejected by long-term resistance and is trading inside a bearish pattern. It is likely to undergo further correction in the coming weeks.
The price of Chainlink (LINK) has risen rapidly since bouncing off the EMA 20-week line during the week of October 16 to 22, 2023 (green arrow). This action helped the price break above the previous support zone at $12.5 and rise to the long-term resistance zone at $18 last week. The LINK price rejected (red arrow) and subsequently decreased.
In an uptrend, the EMA 20-week line often acts as support during corrections, so staying above it indicates that the main trend is still upward.
Indeed, the price strongly rebounded from the EMA 20-week line after the recent sell-off, a sign of buying pressure.
However, the weekly RSI indicator has created a bearish divergence (red line) and dropped below 70, indicating weakening momentum.
Therefore, the LINK price is likely to continue retesting the EMA 20-week line in the coming weeks. The main trend of LINK remains bullish if this line is held.
Ascending Parallel Channel
The daily chart shows that the LINK price has been trading within an ascending parallel channel since November 8, 2023. This is a bearish pattern, often leading to breakdowns in most cases.
Indeed, the LINK price rapidly declined to the channel support after the channel’s resistance rejected it (3 red arrow lines), indicating strong selling pressure at higher levels.
The daily RSI supports the possibility of further decline as it dropped below the 50 level and slopes downward.
However, yesterday’s candle was a candle with a long lower wick and closed above the channel’s support line.
Therefore, the LINK price is likely to recover towards the previous small support zone at $14.8 or the channel’s midline at $16 before potentially continuing the decline.
Technical indicators suggest that the main trend of LINK is still bullish. However, it may break down from the current pattern and retest the EMA 20-week line ($12.3) in the next few weeks.
Since the EMA 20-week line coincides with a horizontal support zone, the bulls are likely to buy aggressively on dips to this line.
Disclaimer: Please note that this article is for informational purposes only and should not be taken as investment advice. As an investor, it is important to do your own research before making any decisions. We are not responsible for any investment decisions you make based on this information. Not Financial Advice.
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