Chainlink (LINK) has delivered a sharp recovery in recent weeks, but a new analysis from Ali Charts suggests the rally may be approaching a point where traders need to become more cautious. The analyst identified three signals that could point to increased selling pressure after a substantial move higher.
The first warning comes from the TD Sequential indicator on Chainlink’s weekly chart. According to Ali Charts, the indicator has flashed a sell signal after LINK climbed about 95% from a low near $7 to a recent high of $13.77.
That rise has changed the short-term risk profile. A nearly doubling price move can encourage early investors and traders to lock in profits, particularly when momentum indicators begin producing reversal signals. However, a TD Sequential sell signal is not a guarantee that LINK will fall.
LINK Rally Faces Technical and Whale Activity Concerns
Chainlink’s recent price action shows why the warning deserves attention. Historical market data shows LINK reached a daily high near $13.69 on September 7 before closing around $12.75, following a strong advance from roughly $11.11 at the start of the month.
The second signal concerns whale activity. Ali Charts cited Santiment data showing transactions worth more than $1 million falling from roughly 59 over a two-week period to about 10 at the time of the analysis.
A decline in large transactions can indicate that major holders are becoming less active. That does not necessarily mean whales are selling, however. Large investors can reduce activity because they are waiting for clearer market conditions, taking profits, or simply moving fewer tokens.
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The third warning involves LINK held on exchanges. According to the analysis, about 1.75 million LINK were deposited to exchanges, pushing the reported exchange balance from approximately 269.25 million to around 271 million LINK.
Exchange deposits are closely watched because tokens moved onto trading platforms can become more readily available for sale. But an increase in exchange balances should not automatically be interpreted as an imminent sell-off. Tokens can also be transferred for custody changes, trading strategies or other operational reasons.
What the Signals Mean for LINK Price
Taken together, the three indicators present a more cautious picture after LINK’s powerful recovery. Momentum has been strong, but the combination of a weekly TD Sequential sell signal, reduced large-holder activity and higher exchange balances suggests traders may want to watch the market more closely.
The key issue now is whether LINK can maintain the higher price levels established during the recent rally. If buyers continue absorbing supply, the warning signals could lose importance as the market establishes a new upward trend.
Related: Chainlink Price Rises as Whale Activity Surges 344% and Large Holders Add 3 Million LINK
On the other hand, a sustained loss of momentum could make profit-taking more aggressive. LINK’s September 7 trading range already showed volatility, with the token moving between roughly $12.66 and $13.69 before closing lower for the day.
For Chainlink holders, the exchange data may be particularly important if deposits continue rising while price weakens. That combination would provide stronger evidence that some investors are using the rally to reduce exposure.
There is also a broader distinction between network fundamentals and short-term price action. Chainlink’s oracle infrastructure, cross-chain technology and growing role in tokenized assets can remain important even if LINK experiences a correction.
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As a result, the current signals should be treated as risk indicators rather than a definitive bearish forecast. LINK has already demonstrated strong demand during its recovery, and the market will ultimately determine whether the latest warnings mark the beginning of a reversal or simply a pause within a larger trend.
For now, the most important levels are those created by the recent rally itself. A failure to hold higher support would strengthen the bearish case, while renewed buying above the recent high would weaken it. For LINK traders, the next phase may depend less on the size of the previous rally and more on whether buyers can absorb the potential profit-taking now emerging.
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