In the current climate of cryptocurrency market uncertainty, Chainlink (LINK) appears to be on the verge of a significant price decline. Technical indicators have signaled a bearish outlook for LINK, as the token has formed a negative price action pattern on its daily chart. Alongside major cryptocurrencies, LINK’s price is in retreat, leaving traders and investors cautious about its short-term prospects.
LINK Price Momentum
At the time of writing, Chainlink is trading around $10.52, marking a 2.7% drop in the last 24 hours. This decline is coupled with a sharp 19% reduction in trading volume, reflecting lower activity and participation from traders. The drop in volume is often viewed as a lack of interest or a signal of trader hesitancy, which aligns with the broader bearish sentiment in the market.
LINK’s Technical Breakdown
Technical analysis points to troubling signs for LINK’s price trajectory. The formation of a bearish head-and-shoulders pattern on the daily time frame suggests that the token is poised for further declines. This pattern is widely regarded as a precursor to a bearish reversal, signaling that the recent uptrend may have reached its peak.
More concerning is LINK’s breach of its crucial descending trendline support, which has been in place since August 2024. With this support level broken, LINK is vulnerable to further downward movement. If the token closes a daily candle below the $10.30 neckline of the head-and-shoulders pattern, analysts predict a potential 13% price drop, bringing LINK closer to the $9 mark in the coming days.
Moreover, LINK is currently trading below its 200-day Exponential Moving Average (EMA), a key indicator used by traders to assess long-term trends. A move below the 200 EMA typically signals a bearish market, prompting traders to consider short positions.
Adding to LINK’s bearish outlook are on-chain metrics, which paint a grim picture for the token’s near-term future. According to data from Coinglass, LINK’s long/short ratio stands at 0.82, indicating that a majority of traders are bearish on the asset. A long/short ratio below 1 reflects a market sentiment where traders are increasingly betting on the price to fall.
In addition to the low long/short ratio, LINK’s open interest has risen by 5.2% over the past 24 hours. This uptick in open interest, combined with the growing number of short positions, suggests that traders are preparing for further declines in LINK’s price. Currently, 54.84% of top traders are holding short positions, while 45.16% are maintaining long positions, signaling a shift in sentiment towards bearishness.
Outlook for LINK
With technical and on-chain metrics both leaning towards a bearish outlook, Chainlink could be facing a significant price drop in the near term. If LINK breaches the critical $10.30 support level, a decline to $9 is highly likely. Investors and traders are closely watching the market, waiting for confirmation of this downward trend.
As the broader cryptocurrency market continues to grapple with uncertainty, LINK holders should remain cautious and keep a close eye on key support levels and on-chain metrics to gauge whether this bearish trend will continue.
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.
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