The price of Chainlink (LINK) displays promising long-term bullish signals as it successfully reclaims a significant horizontal level. It is currently trying to overcome a long-term diagonal resistance level. If successful, this will be a positive sign for potential upward movement.
The long-term indicators suggest that LINK will eventually break out from the resistance line. However, short-term ones cast some doubt on this possibility, especially if the current parabola breaks down.
Chainlink Price Does Not Clear Long-Term Resistance
According to the weekly time frame technical analysis, the price of LINK has been on a decline below a descending resistance line since May 2021. This decline resulted in a low of $4.75 in June 2023, and it seemed to cause a breakdown from the $6 horizontal area that had been established since May 2022.
However, there was a quick recovery, and the price returned to the $6 area, confirming it as a strong support level. This recovery invalidated the previous breakdown. Such price movements often lead to significant reversals, which has been the case with LINK.
The LINK price attempts to break out from the same descending resistance line for the third time (red icon). The line has been in place for an extended period of 815 days.
A successful breakout and close above this line would indicate that the correction is complete and a new upward trend has started.
While the weekly Relative Strength Index (RSI) supports the upward movement, it does not yet confirm the possibility of a breakout. Traders use the RSI as a momentum indicator to assess whether a market is overbought or oversold and to make decisions about accumulating or selling an asset.
When the RSI reading is above 50 and trending upwards, it suggests that bulls still hold an advantage. Conversely, if the reading is below 50, the opposite is true. The RSI is increasing and above 50, but a close above the 50 line is needed to confirm the bullish trend reversal.
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LINK Price Prediction: Has LINK Reached a Local Top?
The technical analysis from the short-term six-hour timeframe suggests that the trend is still bullish. However, the invalidation level of the short-term bullish structure is close. Thus, a continued decrease will likely lead to a deep retracement.
Since the June 10 lows, the LINK increase has followed a parabolic ascending support line. This occurs when the rate of increase is rapid and often means that a bullish trend reversal has begun. So far, the line has been touched six times (green icon).
The LINK price currently trades just above this parabola. If the price bounces, it will likely break out from the long-term resistance line and increase to $12.
However, if it breaks down, a drop to the 0.5-0.618 Fib retracement support area at $6.20 – $6.60 will be likely. According to the Fibonacci retracement levels principle, following a significant price change in one direction, the price is expected to partially retrace or return to a previous price level before resuming in its original direction.
So, the LINK price will be expected to resume its upward movement afterward.
As a result, the future LINK price prediction will depend on whether the price breaks down from the parabola or bounces. A breakdown from the parabola will likely lead to a retracement towards the $6.20-$6.60 area.
This would not invalidate the long-term bullish structure. However, it will indicate that it will take longer to transpire. On the other hand, a sharp bounce could lead to a quick increase to $12.
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