The price of Chainlink (LINK) shows bullish signs in several timeframes, indicating that a significant upward movement could transpire soon.
The long- and short-term RSI are especially bullish, creating long-term bullish divergences, which are vital to a bullish trend reversal.
Chainlink Price Reclaims Horizontal Support After Deviation
The weekly timeframe technical analysis shows that the LINK price has traded in a range between $5.60 and $8.60 since May 2022. While it is also possible that the price has followed a descending resistance line, it is difficult to determine its slope due to numerous long upper wicks (red icons).
In June, LINK seemed to have broken down from the $5.60 horizontal support area (green circle). However, it bounced almost immediately afterward and reclaimed the area in the process.
This means that the breakdown was invalid, and the decrease was only a deviation. Such deviations are considered bullish signs and are often followed by upward movements.
After reclaiming the area, LINK was rejected by the resistance line again before returning to $5.60, validating it as support once more. So, the trend can be considered bullish if LINK does not close below the $5.60 area.
If the price continues to increase, the resistance line will be at $7.90, 25% above the current price. On the other hand, returning to the $5.60 area will be a 10% drop.
The weekly Relative Strength Index (RSI) supports the possibility of an increase and potential breakout. When evaluating market conditions, traders use the RSI as a momentum indicator to determine if a market is overbought or oversold and to decide whether to accumulate or sell an asset.
If the RSI reading is above 50 and the trend is upward, bulls still have an advantage, but if the reading is below 50, the opposite is true.
The indicator is increasing and has nearly reached the 50 line. More importantly, it has generated a significant amount of bullish divergence, which often precedes bullish trend reversals.
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LINK Price Prediction: Will Short-Term Breakout Catalyze Reversal?
Similarly to the weekly time frame, the 12-hour technical analysis provides a bullish outlook. There are two main reasons for this:
Firstly, the LINK price broke out from a short-term descending parallel channel on September 5. Since the channel was facing downwards, the trend is likely bullish.
Secondly, the 12-hour RSI moved above 50 after generating considerable bullish divergence (green line). Both these are considered signs of a bullish trend.
Since first creating a higher low on June 20, the LINK price has increased alongside a very steep ascending support line. On Aug.1, LINK bounced at this support line, creating a bullish hammer candlestick (green icon).
If the LINK price continues to increase, there will be a descending resistance line at $6.50. A breakout from it will likely take the price to the range high and confirm that the trend is bullish.
Despite this bullish LINK price prediction, a breakdown below $5.60 will mean that the trend is bearish. In that case, the LINK price can fall to the next closest support at $4.
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