This is the safest bet for Chainlink traders
Strong developer activity & low network growth: This divergence is primarily the reason why Chainlink has failed performed as consistently as some of its counterparts. In fact, its weekly gains of 7.4% were the lowest among the top 15 coins by market cap (discounting stable coins). This has also correlated to measured movement on the charts. At the time of writing, LINK traded at $25.47, down by 1.44% over the last 24 hours.
Chainlink 4-hour chart
The $22-25 range restricted LINK’s movement since early August, but bulls did eventually manage to push prices above the upper ceiling. A 24% rally soon followed but gains were limited to $27.3. Interestingly, the aforementioned region coincided with the daily 200-SMA (green) which presented a lucrative take-profit for investors. The 20-SMA (red), which clashed with LINK’s swing high of $25, came to the rescue and prevented an extended sell-off. So what’s next for the digital asset?
Since prices have been forming a higher high, support can be found anywhere between $23.3-25. This would allow LINK to maintain its uptrend moving forward. Conversely, a decline below 9th August swing low of $22 would result in further retracements.
The Relative Strength Index dropped sharply after touching the overbought zone- an area which usually presents sell signals. A fall below 45-40 would result in bearish control, from where focus would be on certain support levels. Moreover, the Directional Movement Index was on the cusp of a bearish crossover as the -DI inched closer to the +DI. Such an outcome would mark the onset of a bearish trend. The same was also evident on the MACD, but the index still traded above the half-line which was a positive.
Considering LINK’s bearish signals, focus should be on a support zone of $23.3-25. A bounce back from here would allow LINK to continue its next leg upwards and test its swing high of $27.3 once again. Since the indicators were yet to completely side with the bears, traders were advised to play safe and wait for more developments before entering a position.