- LINK/USD currently trades around $22.
- Chainlink has set another yearly high at $23.
- Strong support around $18.
Chainlink currently trades around $22, with a market cap of $8.9 billion. Several days of bullish momentum continue as a new yearly high was made just above the $23 mark, and the previous yearly high of $20 was broken earlier today.
Cryptocurrency heat map by Coin360
Chainlink has gained a lot of momentum during the past days, resulting in an incredible move of over 70 percent from the previous low of around $13 to the high of $23. However, the price has extended very far in a short time. Therefore, a retracement would help the market increase interest in serious buyers once again.
The analyst sees several possible support areas:
Firstly, the $18 level, which previously acted as resistance for the LINK/USD, will likely provide some support. This level is also confluent with a 50 percent Fibonacci retracement level if measured from the previous swing low of $12.25 to the current high of $23.17. Additionally, the 50 period moving average, seen as a red line on the chart, is also closing in on this area of support.
Secondly, there is a horizontal support of around $15. It has proven to be both solid support and resistance this month. It was first tested on the 4th of January and offered a clear resistance, after which the price of LINK rebounded, broke through, and finally, retraced towards it once again to test it as a support. Several days later, on the 12th of January, LINK/USD moved below it after a very volatile downside momentum, and it offered some resistance once again. Therefore, it is another key area to watch for Chainlink.
During the past 24 hours, LINK has moved by 23 percent, with a volume of $8.2 billion. Chainlink still has not lost it`s bullish momentum as another yearly high was set during the past hours. However, the extreme volatility should scare traders away as the market structure currently offers poor risk/reward for opening a long position.
Chainlink price chart by TradingView
LINK/USD 4-hour chart – First signs of rejection to the downside?
As mentioned, Chainlink has extended too far from the previous major swing low. A strong bearish signal can be seen by the close of the previous 4 hours candle as it has printed a bearish spinning top. This indicates that the price of LINK should see more downside in the upcoming hours.
Key level to watch right now is the $21 price point. If LINK/USD can move below it, a much more serious retracement is likely to be seen next week. This would start the move towards the previously mentioned support areas of $18 and $15.
The area between 50 and 100 simple moving averages should also offer additional information on where the price will find support. As an additional confluence, the 50 percent Fibonacci retracement level is also seen close to the $18 support, while the 61.8 percent level is at $16.4.
Considering how volatile the overall market is right now, traders of Chainlink should wait for further price action development. Right now, LINK/USD does not offer a good trade opportunity. The best entry would be around the $15 mark. However, if Chainlink can show clear respect for the support area around $18, a long position could be made from this point.
Alternatively, a short against the overall trend could be made. This could be done as soon as the price moves below the $21 mark, as it is where the previously mentioned spinning top candlestick would be confirmed. A target for a short position of Chainlink could be the $18 level.
Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.