Key Insights:
- Chainlink is consolidating above $17.80 after a 19% rally, and is maintaining strong bullish outlooks.
- Technical indicators show that the upward moves can continue, with room for further gains.
- A breakout above $20.28 could lead to a test of the $26 resistance area.
Chainlink (LINK) has recently undergone a sharp price correction, after dipping to $17.80. This happened after a strong move above $19.
While this has been a source of panic for many traders, analysts believe that the pullback is part of a healthy consolidation phase, rather than the start of a downtrend.
What Caused LINK’s Recent Rally?
LINK’s surge above $19 was a breakout moment that reversed months of sideways trading. According to the charts, this upward move followed a classic double bottom formation near $14, which is often viewed as a strong bullish reversal signal.
The profit taking by the bears was inevitable after Chainlink entered a 19% rally in just four days. This has been the major reason for the current pullback, which is now being closely watched for signs of either continuation or breakdown.
Bullish Indicators Still Dominate
Despite the drop to $17.80, the picture is still a green one for LINK bulls. For example, the RSI on the daily chart sits at 61.73. This indicates that the asset is not overbought and has room to run before reaching exhaustion.
The MADC histogram is also above zero, with the MACD line trading above the signal line. In addition to all of the above, the moving averages support the ongoing trend.
LINK is holding above key moving averages, including the 50-day SMA at $14.65, its 200-day SMA at $16.09, and just slightly below the 7-day SMA at $18.67. The Bollinger band range also contains the price nicely, with the upper band near $20.50 acting as the next possible target.
These indicators show that LINK is in a temporary pause, rather than a reversal. It also gives traders the confidence to stay positioned or consider buying dips.
Support and Resistance Zones to Watch
Chainlink’s next move depends heavily on how it performs around some important levels.
For example, the $17.88 zone acts as its immediate support and is a pivot zone for current price action.
On the other hand, the $16.57 level coincides with the 20-day moving average, which is a strong defense line for bulls.
Finally, the $13.10 & $10.94 zones are long-term support levels linked to the double bottom structure and would only be tested in a major Chainlink correction.
On the flipside, the resistance levels to watch include $20.28, which must be broken for the bullishness to resume.
The $20.50 zone stands as the upper Bollinger Band, and may offer short-term resistance. In addition, the $26 is a psychological target if the breakout confirms, while $29.26 is the 52-week high.
Should You Buy Chainlink Now?
The current market offers different strategies depending on your risk profile. For aggressive traders, entries near $17.80 provide a favorable risk-to-reward ratio. Setting a stop-loss just below $16.57 and targeting $20.28 or higher offers a setup with great upside.
Conservative traders could be on the lookout for a break and close above $19, which could confirm a continuation. A retest of the $16.57 level could serve as a safer entry with lower risk.
Finally, Dollar-cost averaging between $16.50 and $18.00 might be a great approach, especially considering the recent bullish confirmation and intact trendline support.
