The Calm After the Sell-Off
The crypto market is still feeling the effects of the recent Bitcoin ETF sell-off, but there is a sense of uneasy calm. Chainlink price has fallen from $16 to $15, testing investor patience. The 20 Exponential Moving Average (EMA) on the four-hour chart is the immediate support level, offering hope for a bounce back to $20. However, if it breaks below, Chainlink could spiral further.
Supply On Exchanges Shrinks
The Moving Average Convergence Divergence (MACD) indicator suggests that the bearish cloud may intensify as Chainlink’s price falls below the 20 EMA. This could trigger a larger drawdown. Additionally, a rising wedge pattern in the four-hour range indicates a potential 12% dive to support at $13.
Trapped Bulls and Launching Bears
The falling wedge pattern is known for trapping bulls and launching bears. It occurs within an uptrend but with decreasing volumes, leading to consolidation and convergence. This lack of enthusiasm hints at doubts in upward momentum. Traders should watch for a break below the lower trendline as confirmation of a potential reversal and downward move.
Short Positions and Targets
Short positions can be entered slightly below the breakout point with stop losses placed above it to manage risk. In Chainlink’s case, a 12% target is expected based on the height of the falling wedge pattern. However, confluence support at $14.7 created by the 50 EMA and 200 EMA could save the bulls from further retracement.
Bullish Outlook
Analysts at Santiment believe that Chainlink’s supply on exchanges dropping below 15% for the first time in four years is a bullish sign. This indicates that holders prefer to keep their tokens out of exchanges, reducing selling pressure and boosting investor confidence.
Hot Take: Chainlink Faces Uncertain Future
The future of Chainlink remains uncertain as it tests support levels and faces potential bearish patterns. Traders should stay vigilant and monitor key technical indicators to make informed decisions. While there are bullish signals such as shrinking supply on exchanges, there are also bearish patterns that could lead to further price declines. Ultimately, it is important to consider multiple factors and conduct thorough analysis before making any investment decisions.
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