Chainlink Surges 30% After Monday's Drop: What to Expect Next

Chainlink (LINK) experienced a significant rebound of 30% following a market-wide decline on Monday. Despite this recovery, challenges remain that could limit further gains, particularly around key resistance levels.

Key Takeaways

Price Movements: LINK dropped to $11.74 before rebounding to $14.61, representing a 24.4% recovery.
Trend Analysis: The daily chart indicates a bullish shift, but the broader trend is still bearish.
Key Levels: Significant resistance exists between $15 and $16.6; long-term support is found at $11.74 and $10.94.
Market Dynamics: Observations suggest a potential price pullback and a range formation around $14.2-$15.4.
Future Expectations: Traders should prepare for fluctuations within this range before considering any new positions.

Chainlink recovers quickly from Monday's drop, but key resistance threatens bullish follow-through

Analyzing LINK’s Price Trends

Chainlink 1-day Chart Source: LINK/USDT on TradingView

The recent price movements of Chainlink show a shift toward a bullish internal structure, especially after surpassing the previous lower high of $13.57. Nevertheless, the overarching trend still leans bearish. For LINK’s rally to maintain momentum, it needs to convert the supply zone between $15 and $16.6 into support. On the downside, critical long-term support levels are at $11.74 and $10.94. The On-Balance Volume (OBV) indicates a gradual increase but lacks the explosive buying pressure necessary for an immediate surge beyond $16.6. Meanwhile, the Relative Strength Index (RSI) signaled a bullish momentum shift, currently sitting at 54.

Chainlink 1-hour Chart Source: LINK/USDT on TradingView

On the hourly chart, both price action and the RSI demonstrate robust bullish momentum, although a bearish divergence has emerged, suggesting a potential minor pullback may be imminent. This retracement could bring the price down to the local support level at $14.2.

Chainlink Liquidation Heatmap Source: CoinGlass

The liquidation heatmap indicates that LINK has passed through key magnetic zones between $13.6 and $15. While the area above has a moderate number of short liquidations, they do not pose a significant risk.

The Optimistic LINK Scenario

The presence of smaller liquidity pockets above may still provide the impetus for LINK’s price to rise further. A strengthening trend in OBV is crucial for enhancing Chainlink's chances to rally toward the $16-$16.6 range and perhaps beyond. Achieving this would signify the beginning of a bullish trend, especially if $16.6 is established as support.

A Call to Action for Traders

Given current conditions, the more plausible outcome appears to be a range between $14.2 and $15.4. While these levels are not fixed, they reflect the current trading dynamics. There hasn't been overwhelming buying pressure or trading volume during the recent ascent, and the short-term bearish divergence means a breakout past $16.6 is unlikely in the immediate future.

Furthermore, with essential magnetic zones nearby being depleted in recent trading sessions, the market may require additional time to decide its next course of action. Thus, traders should adjust their strategies to align with this anticipated range.

Concluding Thoughts

Disclaimer: The information presented here does not represent financial, investment, trading, or any other type of advice and reflects solely the author's opinion.