Chainlink Price Pattern Formation: Impact on Price Action

Chainlink Price Pattern Formation: Impact on Price Action

The Bullish Trend of Chainlink (LINK) in the Blockchain Industry

In recent trading sessions, Chainlink (LINK) has exhibited a bullish trend, experiencing a significant rebound from its $5 support level and continuing on an upward trajectory. Over the past week, LINK has surged more than 12%, although its daily chart indicates a slowdown in gains. The coin formed a bullish reversal pattern, driving a substantial price surge. However, to prevent a potential reversal, it is crucial for LINK to maintain its upward movement and surpass immediate resistance levels.

At the time of writing, Chainlink (LINK) was trading at $6.90. The coin has demonstrated significant bullish strength following its recent reversal from the $5 level, driven by the formation of an inverted head and shoulders pattern in the last week. However, despite the upward surge, LINK may encounter resistance around the $7.30 mark, which has historically acted as a strong ceiling for the coin. This resistance is further supported by the formation of a double-top pattern, which is considered a bearish signal.

As a result, there is a possibility that LINK may experience a decline towards the local support level of $6.60 and potentially even further to $5.80 before attempting a recovery once again.

Technical Analysis

During the formation of the double-top pattern, there was a notable decline in buying strength, suggesting an impending bearish price movement. The Relative Strength Index (RSI) indicated a bearish divergence, indicating a decrease in demand. Although the RSI remained above the half-line, readings indicated a fading buying strength. Despite this, LINK has managed to stay above the 20-Simple Moving Average (SMA) line, indicating that buyers still have control over price momentum.

However, if there is a drop from the current price level, it could lead to LINK falling below the 20-SMA (red), which could bring sellers back into the market.

On the one-day chart, the altcoin has exhibited buy signals, although these signals have been experiencing a slight decline. The Moving Average Convergence Divergence (MACD) indicator, which reflects price momentum and trend reversals, has formed declining green histograms, suggesting a potential decrease in buy signals. Additionally, the Bollinger Bands, which indicate volatility, are wide open, indicating the potential for significant price volatility in the upcoming trading sessions.

In summary, Chainlink (LINK) has shown a bullish trend in recent trading sessions, experiencing a rebound from its support level and forming bullish reversal patterns. However, resistance levels and bearish signals pose potential challenges for the coin’s price movement. Technical analysis indicates a decline in buying strength but the presence of buy signals, suggesting a mixed outlook. Traders and investors should closely monitor the market to make informed decisions.