Chainlink Pushes Against Long-Term Resistance
In the weekly timeframe, it can be observed that LINK has experienced significant growth since July 2023. The upward momentum accelerated in October, resulting in a breakout of the long-standing descending resistance line.
Towards the end of December, the price reached a new yearly high of $17.68. However, it has since been on a decline, forming two long upper wicks (red icons) and a falling high. During this decline, the token faced strong resistance at a long-term horizontal resistance area.
Source: TradingView
The Weekly Relative Strength Index (RSI) is currently showing bearish signals. Although it remains above the neutral 50 mark, it is trending downwards. The bearish divergence line (green) remains intact, indicating weakness.
Analyst Perspectives
Cryptocurrency traders and analysts on Platform X have positive outlooks on Chainlink’s potential.
For instance, Altcoin Sherpa predicts that an upward movement is likely to follow the current consolidation period:
12-hour chart LINK/USDT. Source: X
InmortalCrypto also identifies a similar period of accumulation preceding a growth phase. Additionally, CryptoMichNL anticipates a price increase to $25 in the near future.
Analyzing Movement within the Range
The daily chart reveals that LINK has been trading within a horizontal range of $13.30 to $16.60 for the past 82 days. The range’s upper and lower limits have been tested multiple times for strength, with the most recent test occurring on January 20 (red icon).
Currently, the token is slightly below the midpoint of this range. Furthermore, the daily RSI has risen and reached the 50 level (red circle), which could act as resistance.
Elliott wave analysis suggests a potential breakout from the range. The most probable scenario indicates that Chainlink is in the fourth wave of a five-wave upward movement. Sub-wave analysis on the chart shows this progression in black. According to this analysis, LINK is in the final phase of the ABC correction.
Assuming a 1:1 ratio between waves A and C, a low of $11.40 is expected, which is around 20% lower than the current price. This low also coincides with the 0.5 Fibonacci retracement level.
Source: TradingView
Despite this bearish perspective, a recovery above the $16.60 range high could trigger a 30% rally towards the next resistance level at $19.30.
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