Chainlink’s [LINK] price has been caught in a holding pattern since August 5th, leaving investors on the edge of their seats. While the cryptocurrency market as a whole has experienced volatility, LINK’s consolidation phase has sparked speculation about its potential trajectory.
Technical analysis suggests that Chainlink is currently hovering around a crucial support level of $9.65. A successful rebound from this point could ignite a bullish trend, propelling LINK towards its short-term high of $23. However, a dip below the $8.56 support level may trigger a more significant downward movement. To confirm a sustained uptrend, the price must breach the $10.85 resistance level.
The Relative Strength Index (RSI) on the 4-hour chart is nearing the 50% level, signaling a potential market reversal. The formation of a double bottom at 46% and its subsequent climb towards 50% further strengthens the possibility of an upward trend for LINK. This technical indicator suggests that now might be a favorable entry point for long-term investors.
On-chain data provides additional insights into Chainlink’s market dynamics. Coinglass has reported a declining balance of LINK on all exchanges, which is often interpreted as a bullish sign. This trend indicates that large financial institutions may be accumulating LINK in anticipation of a price surge. Historically, decreasing exchange balances have preceded significant price reversals.
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The broader cryptocurrency market is also showing signs of recovery. The recent sharp sell-off may have marked the bottom of the mid-cycle pullback, as suggested by the 180-day low indicator. While this is encouraging, it’s essential to await further confirmation from the market before declaring a full-fledged recovery. The advance/decline line (ADL) still reflects weak momentum, indicating that caution is warranted.
Despite the prevailing market uncertainty, Chainlink’s consolidation phase presents an opportunity for long-term investors. With the potential for a significant price rebound and the cryptocurrency market showing signs of recovery, LINK could be poised for a strong performance. However, as with any investment, conducting thorough research and considering individual risk tolerance is crucial.
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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