Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be taken as investment advice
The crypto-markets were under severe duress on hump day as the Bitcoin sell-off continued amid news of El Salvador’s Bitcoin wallet malfunction. As a result, the king coin tumbled by 13%, naturally triggering a chain reaction in the altcoin market as well.
Chainlink, which recently enjoyed a steady hike to a local high of $36.5, declined dramatically along with most of its other counterparts. At the time of writing, LINK was trading at $26.1, down by 23% compared to yesterday.
Chainlink 4-hour Chart
Source: LINK/USD, TradingView
Prior to the 24 hour plummet, Chainlink was making progress on the charts. A bull flag breakout led to a 22% surge to a near 4-month high of $36.5.The 50% Fibonacci level was also toppled for the first time since 03 June. However, a recent bout of selling pressure erased nearly all of the gains seen in September so far.
A lot of pressure now fell onto the support zone between $24-$24.6. The aforementioned region was prominent throughout mid-August and served as a base for buying on multiple occasions. This could be the case once again as LINK looks to counter selling pressure.
Additional support lines rested at $22 and $21.2 in case of an extended sell-off. However, a drop below the latter price level could drag LINK all the way to its July-lows.
Reasoning
LINK’s indicators posted unwanted milestones due to high selling pressure in the market. The MACD traded below the half-line for the first time in over a week. Moreover, the histogram, which measures the distance between the fast-moving MACD and Signal lines was at its lowest level in five months.
The Awesome Oscillator did not fare too well either. The index was in danger of dipping below levels seen in June when the price dropped to a 1-month low of $15. Finally, the RSI shifted into oversold territory.
Historically, LINK has reacted positively each time its 4-hour RSI has dropped to the bottom zone and this could instill buying in the market.
Conclusion
LINK’s defensive resort between $24-$24.6 would be under the spotlight in the coming sessions if sellers continue their assault. Failing to trim losses within this zone would call support lines of $22 and $21.2 into action.
Meanwhile, traders can wait for LINK to show signs of a reversal between $24-$24.6 and go long at this discounted price level.
