Chainlink’s recent pullback has brought it down to retest the $14 level, and there are implications for the cryptocurrency if this support holds.
Light Resistance at Higher Levels
Analyst Ali noted in a recent tweet that Chainlink is currently within a crucial on-chain demand zone, indicating a thin resistance level at higher price ranges. This analysis is based on the number of investors or addresses that bought their coins within this range, defining it as a significant support or resistance level.
The investor’s cost basis is critical as it determines their profit or loss when the cryptocurrency retests it. If the price reaches equilibrium after a loss, the holder may be inclined to sell to break even, while a retest from above may prompt buying to capitalize on past profitability.
While single investor actions may not significantly impact the market, shared cost bases can lead to substantial reactions when the price retests those levels.
Here, you can see the Chainlink ranges around the current price in terms of investor density:
If the $14 level continues to hold, Chainlink could see a swift return to highs earlier this year.
LINK Price Movement
Chainlink briefly dipped below the $14 range but recovered quickly, confirming its support level.
Hot Take
Chainlink’s on-chain data suggests that a thin resistance level at higher price ranges could lead to significant price reactions, especially if the $14 support holds. This could potentially prompt a swift return to earlier highs for the cryptocurrency, highlighting the importance of monitoring these critical on-chain demand zones.
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