The reaction of Link of the chain (LINK) to the $7.40 minor resistance area could determine the direction of the next move.
LINK is Chainlink’s native token, a proof of participation blockchain network created by Sergey Nazarov. Since May 2022, Chainlink price has been trading above the $5.75 horizontal support area. Despite falling to a low of $5.30, LINK price remained above the support level of $5.75. While it fell slightly lower in some cases, it failed to close below the $5.75 area, which could trigger a crash.
The weekly RSI created bullish divergence (green line) throughout this time. Such a high time frame divergence is unusual. As a result, it frequently occurs before significant uptrend reversals. The fact that the RSI moved above 50 further supports this possibility.
If the uptrend continues, $9 would be the next resistance level. The price has not closed beyond this level since May 2022. Therefore, a close above it could accelerate the rally towards the next resistance at $18. This aligns with the weekly RSI readings. However, if the LINK token price closes below $5.75, it could drop to the next support at $4.30.
Chainlink (LINK) falls after rejection
Despite the bullish outlook on the weekly time frame, the daily’s technical analysis shows weakness. This is visible in both the bearish divergence on the daily RSI and the rejection of the resistance at $7.93, created by the 0.618 Fibonacci retracement resistance level (white). While LINK price initially rallied above the area, it created a long upper wick and then fell.
LINK price is also following a descending resistance line which is currently near $9. This increases the importance of the $9 resistance area described above.
Therefore, the future trend can only be considered bullish if LINK breaks above this confluence of resistance levels.
Chainlink (LINK) in a Crucial Short-Term Pattern
Finally, the short-term six hour time frame shows that the LINK price is trading at a crucial level. There are two main reasons for this.
First, the price is trading just below the $7.40 horizontal area. The area was previously supportive and has now apparently turned into resistance. Therefore, if the LINK price recovers or is rejected, it could determine the future trend.
Second, the price is trading in a falling wedge, which is considered a bullish pattern. If LINK price breaks out of it, it will recapture the $7.40 resistance area as well. This could happen in the next 24 hours.
However, if the price breaks out of the falling wedge, it could drop to the 0.618 Fibonacci retracement support level at $6.53.
To conclude, if Chainlink price breaks or turns down from the current wedge pattern it could determine the future trend. A break could lead to an attempt to break above $9, while a break could lead to a drop to $6.53.
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