- 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.
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.
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.
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