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LINK forecast

Chainlink (LINK) Forms Head and Shoulders Pattern, Further Drops Could Hit $10-11

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  • LINK is developing a typical head and shoulders formation on the daily chart, which is an indication of a possible bearish move.
  • A valid break of the neckline may see a downward correction to the area of the support located between $10 and $11.
  • The short-term indicators of RSI and MACD trends are also bearish, and this supports downside risks for LINK.

The Alpha Crypto Signal has highlighted that Chainlink (LINK) is displaying what may be regarded as a bearish formation on the daily chart named the head and shoulders pattern. This kind of pattern is often identified as an indicator of a potential reversal of an uptrend to the downtrend. 

In this setup, the price enters a higher peak (left shoulder), then a higher peak (head) and again a lower peak (right shoulder). This is in the form of an outline resembling the shoulders and the head of an individual. 

Analysts Warn of Bearish Continuation Below Neckline

According to analysts at Alpha Crypto, LINK has now completed the right shoulder and is hovering close to the “neckline,” which is a key support level where price reactions often happen.

They explained that if LINK breaks below this neckline with strong selling volume, the token could see a sharp move downward. If that happens, the price might drop toward the $10 to $11 range. 

The analysts stressed that traders should watch the neckline area closely. If the breakdown occurs, it could open up a short-selling opportunity. However, if the neckline holds, LINK may just continue to trade within a sideways range without any clear direction.

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Source: X @alphacryptosign

The daily chart attached to their post supports this view, showing how the left shoulder formed around mid-April, the head peaked in early May, and the right shoulder shaped up in June. A dotted neckline clearly links the two low points between the shoulders and head, and price action is testing this level again. 

Short-Term Chart Confirms Bearish Sentiment in LINK

Meanwhile, a look at the 4-hour LINK chart from TradingView reveals more short-term indicators backing this bearish view. At the time of analysis, this cryptocurrency was trading around $13.16. 

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Source: TradingView

The RSI sat at 26.51, which indicates that the coin is currently in oversold territory, suggesting sellers have been in control. Additionally, the MACD is showing bearish momentum, with both the MACD and signal lines below the zero level and widening apart. 

Volume has also remained weak, with no major upticks in buying pressure, further supporting the downtrend stance. While a breakdown isn’t confirmed yet, analysts are advising traders to remain alert and watch how the price reacts around the neckline. 

Related Reading |  ApeCoin Price Holds Steady Above Key Support, Eyes Potential Rebound 

Whales Accumulate 376M $LINK at $6.30: Is a Chainlink Rally Imminent?

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  • Whales have accumulated 376 million $LINK at the $6.30 level, forming a strong support zone.
  • $15.22 has emerged as a key resistance level, with potential selling pressure from holders at a loss.
  • Analyst Ali suggests Chainlink’s next big move will depend on breaking key levels with strong trading volume.

According to a chart shared by popular crypto analyst on twitter Ali (@ali-charts), there has been a significant purchase of Chainlink’s native token ($LINK) at the $6.30 price range. Hence, he believes that this price region is a strong support level for $LINK.

The analyst revealed that $LINK buyers bought 376 million of the token, a proof of the conviction from large holders, known as whales. As shown by the green clusters, the chart showed that lots of buyers piled up at this price point.

Hence, majority of wallets that purchased the token at this price are holding it at a profit. With so many buyers at this point, it is unlikely that $LINK’s price will drop below this level.

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Source: X @ali_charts

Is this the Start of a Rally?

Also, the massive purchases at this point could be a signal that Chainlink is about to start a strong rally. Usually, purchases by deep-pocketed investors lead to price jumps as these players invest for the long term.

Hence, Ali believes that the $6.30 price could become the point at which $LINK’s price start experiencing a substantial upward movement. Meanwhile, the analyst also stated that the $15.22 price is a key resistance level for investors and traders to monitor.

At such levels, selling pressure are usually greater than buying pressure, leading to a pause or reversal in the coin price’s upward movement. Using the chart, Ali explained that the red clusters which corresponds with the $15.22 price represents a price point where addresses that purchased at this price are currently holding in losses.

Hence, if the coin’s price reaches this level again, many of them may choose to sell to recoup their investments, even though it would be without any profit.

According to the analyst, this could add to the selling pressure at this price level.

Chainlink’s Support Vs Resistance Zone

Ali also explained that Chainlink‘s price movement in the near to medium term will be determined by the interplay between the support price point of $6.30 and the resistance price point of $15.22. Should $LINK break above the $15.22 resistance price level following strong trading volume, it could start a stronger rally.

In contrast, it fails to break above this price, it could reverse back towards the established support levels. Traders seeking to make any position (buy or sell) would need to pay attention to broader market sentiment and trading volume between these important support and resistance levels.