Chainlink Price Analysis: Failing at crucial support could see a drop to $8

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  • LINK is currently trading in an ascending wedge formation.
  • 50-day SMA acts as a significant level of resistance.

After reaching an all-time high of $19.20 on August 16, Chainlink dropped to a low of $7.60 on September 23. Since then, the decentralized oracle has been trending in an ascending wedge formation and is currently trading for $10.60. This ascending wedge is a bearish pattern that starts wide and tapers as it goes up.

LINK/USD daily chart

LINKUSD daily chart

The 50-day SMA ($10.55) is currently the most significant support level for the decentralized oracle. As per the IOMAP, 7,750 addresses had previously purchased 31.6 million LINK tokens. A drop below the 50-day SMA will see LINK fall to the 200-day SMA ($8).

LINK IOMAP

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Adding further credences to the bearish outlook is the fact that the whales seem to be dumping their holdings. The number of addresses holding 100,000-1 million LINK tokens dropped from 256 on September 24 to 240 on October 30. Plus, the number of whales holding 1 million to 10 million tokens is constantly drifting between 51 and 50 since October 17.

LINK holders distribution

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Can the bulls flip the narrative?

To change this narrative, the buyers can hope to bounce back up from the 50-day SMA and reach the upper limit of the rising wedge ($13.45). The IOMAP shows a lack of strong resistance levels upfront. There is are moderate resistance barriers at $12 and the 100-day SMA ($11.65), but it shouldn’t be much of an issue.

Key price levels to watch

LINK bears will need to break below the 50-day SMA ($10.55) and drop to the 200-day SMA ($8).

On the other hand, the buyers will want to bounce up from the 50-day SMA and reach the upper level of the wedge formation ($13.45).
 

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