The decentralized oracle network ChainLink and its native token, LINK, have staged a price recovery amid the broader cryptocurrency market’s bounce from a recent significant correction.
Despite experiencing a 16% price retracement over the past month, LINK has regained its stronghold, rising 5% to $13 up to now 24 hours after hitting a six-month low of $11 on Friday. Still, cautionary signals have emerged that caught the eye of crypto expert Ali Martinez.
Bearish Signals For ChainLink
In a recent social media post, Martinez raised concerns a couple of pattern visible on LINK’s each day chart, suggesting the potential for a considerable price correction ahead.
Specifically, the analyst highlighted a possible retest of the neckline of the head-and-shoulders pattern through the recent upswing to $13.
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Based on Martinez, this pattern indicates a continuation of the downtrend until the best shoulder is broken, meaning that the ChainLink price would need to break above the $20 level, the highest of the best shoulder, to invalidate this scenario.
The 1-D chart shows LINK’s head and shoulders pattern. Source: LINKUSD on TradingView.com
If this scenario is as predicted, ChainLink could face a forty five% correction. Martinez previously highlighted the likelihood of such a correction if LINK were to interrupt below the $12.70 support level.
The token’s price might retrace significantly on this bearish scenario, potentially reaching as little as $6.60. Notably, these levels were last witnessed in September 2023, before the commencement of the general market uptrend that began in November of the identical 12 months.
Key Levels For LINK’s Price Recovery
One other analyst, Crypto Ambrosio, presents similar downward scenarios for the ChainLink price in a recent evaluation of key indicators.
The analyst suggests that if the 20-week exponential moving average (EMA), depicted by the yellow line within the chart above, stays above the present price motion, it will function a notable bearish signal for the token. Nevertheless, breaking above this indicator situated at $14.75 would invalidate this bearish outlook.
Moreover, Crypto Ambrosio noted a downtrend pattern within the Relative Strength Index (RSI), further supporting the notion of a latest downtrend for ChainLink. To counter these bearish signals, it’s crucial for LINK to carry the $12 support level, as noted by the analyst.
Ambrosio also believes that if ChainLink forms a Falling Wedge pattern and breaks the resistance at $15, it could signal a bullish reversal and pave the best way for further price recoveries toward its yearly high of $22.89, reached in March.
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The token must overcome key upper resistance levels while trading at $13.28 to initiate a possible price recovery. Upon analyzing the LINK/USD each day chart, the token will likely encounter its first significant challenge on the $13.52 price level, which has acted as a resistance for the past two months.
Furthermore, to invalidate the extension of the bearish scenario and surpass the 20-week exponential average, the ChainLink price would wish to surpass and consolidate above the $14.38 resistance level.
Featured image from DALL-E, chart from TradingView.com