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Key Takeaways:
- Chainlink (LINK) dropped 5.25% after failing to break above the 200-day EMA, signaling a potential bearish reversal with traders increasing short positions.
- On-chain data shows a decline in daily active addresses and trading volume, suggesting weakening investor interest and a possible 10% drop toward the $12.70 support level.
Chainlink’s [LINK] recent bullish momentum is showing signs of exhaustion after a strong 22% rally. The altcoin, which had reclaimed higher price levels earlier this week, is now facing renewed selling pressure near key technical resistances, casting doubts on its short-term strength.
At press time, LINK was trading around $14.40, marking a 5.25% dip in the last 24 hours. This pullback comes as the price failed to break above the critical 200-day Exponential Moving Average (EMA), reinforcing a bearish market structure.
According to on-chain data from IntoTheBlock, the number of Daily Active Addresses dropped by 13%, suggesting declining user engagement with the network. Adding to the bearish sentiment, trading volume fell by 11%, indicating reduced market participation during this correction.
The market’s cautious tone is further reflected in derivatives data. Analytics from CoinGlass highlight a sharp increase in short positions, with traders seemingly betting on further downside. Key liquidation levels are clustered at $14.25 (support) and $15.77 (resistance), with $2.90 million in long positions at risk if the lower level breaks. On the flip side, a move above $15.77 could liquidate $15.37 million worth of short positions—though sentiment suggests this outcome is less likely.
From a technical standpoint, LINK has formed a series of lower highs, facing consecutive rejections at both a descending trendline and the 200-day EMA. The current downturn marks the third such rejection in recent weeks, echoing a bearish reversal pattern historically seen in LINK’s price action.
If LINK fails to flip the $15.77 resistance into a support zone, analysts warn of a potential 10% drop, possibly sending the token toward the $12.70 region.
In summary, Chainlink’s latest pullback appears to be more than a minor correction. With weakening on-chain activity, rising short interest, and technical resistance capping further gains, LINK may be poised for additional downside—unless bulls reclaim control above the $15.77 threshold.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses
Also Read: Chainlink (LINK) Breaks Out of Two-Month Range – Is a Major Rally Ahead?
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