Chainlink: Here’s when a bullish reversal can be expected
Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be taken as investment advice
A brief period of recovery was short-lived after Chainlink failed to topple its 38.2% Fibonacci level. With sellers initiating further southbound declines, an important support zone and Fibonacci level took the center stage. While the broader market uncertainties did carry the threat of an extended decline, buyers can be expected to respond at a critical price point.
At the time of writing, LINK was valued at $26.8, down by 3.4% over the last 24 hours.
Chainlink 4-hour chart
Chainlink did see a near 20% surge between 8 and 9 September, but profit-taking resumed once the price touched the 38.2% Fibonacci level. Momentum was back with the sellers as the candles dipped below their 4-hour 200 and 20 SMAs.
From here, bulls faced an uphill battle to regain control. The first step would be to target a decisive close above the 38.2% Fib level. This would allow LINK to push further towards the swing highs of $31.6 and $31.7.
However, LINK’s indicators ran in bearish positions and certain support areas would be more in focus. For LINK, the 23.6% Fibonacci level is crucial to its short-term success. The aforementioned point has served as an important support and triggered multiple rallies since mid-August. In case this defense is breached, the market will be vulnerable to losses all the way up to $21.
After a sharp drop towards the oversold zone, LINK’s RSI did reverse itself. However, it was unable to clear 50 due to bearish control. A downtrend is normally active in the market till the RSI jumps above 50-55. Even the MACD traded well below its half-line.
Such a reading attracts more short-sellers rather than bullish traders. Interestingly, the Awesome Oscillator was taking shape within a bullish twin peak. Since this setup is ideally followed by a surge in buying pressure, there may be chances of a LINK revival in the coming sessions.
LINK is expected to drop to $24.6-$24, a level from where a reversal can be expected. Most of LINK’s indicators flashed bearish signals, despite the Awesome Oscillator presenting minor chances of an immediate U-turn in price.
Either way, the market seemed to have more risks for bullish traders than short-sellers. Steering clear of any positions till LINK touches $24 will be a safer bet for traders.