Chainlink (LINK), a prominent player in the decentralized oracle network space, has entered turbulent waters. Over the past three days, the cryptocurrency has breached several key support levels, raising concerns about its short-term future.
Adewale Olarinde, a crypto journalist, delves into the recent price movements and analyzes the technical indicators to gauge potential reversal odds for LINK.
Price Tumbles, Support Levels Crumble
The downtrend for LINK began on June 3rd with a 5.7% drop, pushing the price down to around $13.50. The following day witnessed a steeper decline of 7.66%, bringing LINK to approximately $12.50. At the time of writing, the price sits precariously at $12, having suffered an additional 4% loss.
This southward trajectory is further emphasized by a critical shift in Chainlink‘s technical indicators. The long and short moving averages, visualized as yellow and blue lines on charts, have flipped roles. Previously acting as support levels, they now present resistance at $15.6 and $16.2, respectively.
The situation worsens when considering former support levels around $13.8 and $12.8. Due to the recent price depreciation, these levels have morphed into resistance points, creating additional hurdles for any potential price recovery.
Sellers Flex Their Muscle, Funding Rate Shifts
An analysis of the weighted funding rate on Coinglass reveals a noteworthy development. While the rate remained slightly above zero on July 4th, indicating a sliver of bullish sentiment, a more recent data point paints a concerning picture. The funding rate has plummeted to -0.0143, signifying a significant shift in market dynamics.
This sharp decline suggests a surge in short positions, with traders betting on a further price drop for LINK. The negative funding rate underscores the dominance of sellers in the current market.
Navigating the Choppy Waters: Where Does LINK Go From Here?
The prevailing short positions and negative funding rate paint a bleak picture for LINK in the short term. Reversing this trend will require a substantial effort from buyers to counter the strong bearish sentiment.
Adding to the concerns, Chainlink’s Relative Strength Index (RSI) is inching closer to the oversold zone (below 30). If the RSI dips below this threshold, it would further highlight the vulnerability of the current price position.
While the immediate future appears uncertain, only time will tell if buyers can muster the strength to reverse the downtrend or if LINK succumbs to the prevailing bearish pressure.
