Major cryptocurrencies like Bitcoin are plunging to four-month lows as the cryptocurrency market continues its summer meltdown. A major participant in the decentralised oracle network market, Chainlink (LINK), has taken a particularly severe beating, plunging 25% since the start of June. However, is this a chance to purchase or the beginning of a far sharper decline?
This Chart Pattern Looms Large
Technical experts are closely examining Chainlink’s chart, paying special attention to the infamous “Head and Shoulders” pattern. With two minor peaks flanking the primary one, this pattern frequently denotes a turn in the trend from bullish to bearish. A break of the neckline, the support level that is presently at $12.70, according to analyst Ali Martinez, might lead to a big decline.
#Chainlink $LINK faces a potential 45% price correction if it falls below $12.70! pic.twitter.com/8NGwMzEIhR
— Ali (@ali_charts) July 4, 2024
Martinez cautions that if LINK drops below $12.70, there may be a chain reaction sell-off. This may cause the price to plummet by an astounding 45% to $6.80. Fibonacci retracement values, a technical indicator of possible zones of support and resistance, add to this pessimistic view. Martinez’s goal price of $6.80 is exactly in line with the Fibonacci level of 0.786, which supports his prediction.
Bearish Sentiment Grips The Market
The general pessimistic mood that permeates the cryptocurrency market is adding gasoline to the fire. An indicator of market mood, the Fear and Greed Index, is now at a frightening 26, far into “Fear” zone. The trading behaviour of LINK reflects this worry. The price is fighting to hold above the crucial level of $12.70, and a clear breach below it might hasten the sell-off.
A Glimmer Of Hope: Oversold Territory And Price Prediction
But there’s still a ray of hope. Another technical signal, the Relative Strength Index (RSI), indicates that LINK may be oversold. At 28, the RSI is approaching “oversold” territory. Given the frequency of brief market corrections for oversold assets, this may indicate a possible short-term rebound.
Fascinatingly, some analysts disagree with the general pessimistic outlook. By August 5th, the price of LINK is expected to have increased by 52.73%, reaching a wholesome $18.97. Technical analysis presents a negative image, but our forecast provides a counterbalance by emphasising the inherent unpredictability of the cryptocurrency market.
The Road Ahead For LINK
In the end, it’s unclear what the future holds for Chainlink. Technical signs beg for caution, yet some experts continue to see things positively. For Chainlink, the upcoming weeks will be very important. Will it resist the negative rumours and make a rebound, or will it give in to the pressure of a more significant correction?
Featured image from Coldkeepers, chart from TradingView