Chainlink has been flashing signs of intense weakness throughout the past few days, with the cryptocurrency breaking below the lower boundary of its long-held trading range as its buying pressure begins dissolving.
This type of sustained retrace is quite unusual for LINK, as the cryptocurrency typically only sees sharp downside movements that are followed by even sharper rebounds.
This time has been a bit different, however, as the descent from its recent highs of $20.00 has caused it to see a slow grind lower that is showing few signs of reversing.
It has been able to find some strong support around $10.50, but Chainlink’s overall short-term outlook still remains rather weak, and analysts are noting that it could decline significantly further.
One trader is specifically looking towards a move down to $7.915, explaining that the support here may be enough to catapult it back up to its all-time highs that are currently set around $20.00.
The same trader also notes that a recapture of $13.00 followed by a confirmation of this level being flipped into support could also allow it to buck this downtrend and extend its macro momentum.
Chainlink Breaks Below Lower Boundary of Trading Range
At the time of writing, Chainlink is trading down marginally at its current price of $11.00, which marks a notable rebound from its daily lows of $10.50 that were set earlier today.
These lows came about during a sharp grind lower seen earlier this morning, which occurred in tandem with Ethereum’s descent to lows of $355.
Much like ETH, LINK was able to post an ardently bullish response to this decline, which sent its price rocketing up towards $11.30.
It has since lost its momentum and declined slightly lower. It still sits below its recent range lows in the mid-$11.00 region that had been established throughout the past few weeks.
Analyst: Here are the Key Levels LINK Investors Should Consider
One analyst explained that he is watching for one of two scenarios before he flips long on Chainlink.
Either the cryptocurrency drops to its bedrock support level at $7.90 before rocketing back towards $20.00, or it reclaims its resistance as support around $13.00 and uses this as a launchpad to post further gains.
He does expect further upside eventually:
“Here is what I mean with either buying: (1) Reclaim of resistance as support (2) Buying retest of lower support. With bitcoin being very volatile you don’t want to be stuck holding [altcoins], wait for key levels – don’t get chopped.”
Image Courtesy of Teddy. Chart via TradingView.
Chainlink appears to be closely tracking Ethereum’s price action at the moment, which means that ETH’s mid-term trend will likely hold influence over that of LINK.
Featured image from Shutterstock. Charts from TradingView.