Chainlink (LINK) made an important bounce on February 1, managing to avoid a bearish breakout. Potentially, growth to $7.90 or even $9.48 is not excluded
Chainlink aims to become a leader in the dNFT segment
Recently, the news about the Chainlink decentralized oracle network is closely related to the news about dynamic non-fungible tokens, dNFT. At the end of January, the project announced the imminent launch of dynamic NFTs by tweeting:
1997: Most web pages are static. In the future, most web pages will be dynamic. 2023: Most NFTs are static. In the future, most NFTs will be dynamic. Understand why dynamic NFTs are a game-changer for non-fungible assets.”
Source: Twitter
Dynamic NFTs can really break the notion of non-fungible tokens, since such assets can change depending on external conditions.. Updating and changing part of the metadata without losing the unique characteristics of the token is carried out thanks to the encoded logic of the smart contract that controls the data. Automatic changes are encoded in the smart contract and give instructions to the token as to under what conditions its metadata will change.
Chainlink network plans to become the primary provider of off-chain data and computing services that will be used to generate dNFT updates. Chainlink emphasized that the ownership of such tokens will be preserved due to the permanent token identifier.
At the same time, the potential of dNFT is very high.. Changes to parameters will keep holders from losing interest in tokens, while not having to mint new NFTs to reflect each change.
In addition to the dNFT topic, also on February 1, the Chainlink Spring 2022 hackathon winner Picardy protocol announced that it will integrate Chainlink Automation, a service for Web3 developers, into the Polygon mainnet.
Is a long-term reversal coming?
Meanwhile, technical analysis results show that Chainlink coin has been trading above the $5.75 horizontal support area since May 2022.. Although the price made a low of $5.30, it still managed to hold above the $5.75 support on the weekly timeframe, avoiding a close below that level.
The weekly RSI has been giving bullish divergence signals all this time (green line). Divergence on such long timeframes is rare and often precedes a significant bullish trend reversal.
If the rally continues, $9 resistance will come into play. The price has never closed above this level since May 2022. Such a close could accelerate LINK's momentum towards the next long-term resistance at $18.
On the other hand, closing the week below $5.75 would be an indication that the bearish trend will continue.. In this case, the token may fall to $4. However, a bullish breakout is more likely due to bullish divergence signals.
Source: TradingView Chainlink may hit $8 in February
The daily chart shows that Chainlink price made a bullish breakout of the descending resistance line in early January.. After that, the price peaked at $7.52.. It happened on January 29th.
Although the daily RSI is signaling a bearish divergence, the price has already declined in response to this divergence.. Then the trend reversed.
If the growth continues, the next resistance will come into play at $7.91 (Fibo level 0.618 retracement). A breakdown of this level will accelerate the growth rate towards $9.48.
Source: Trading View
Wave analysis also reflects a bullish picture for Chainlink. He suggests that in early January, the price most likely completed a five-wave bullish structure, and after that also formed an “irregular flat” correction structure (irregular flat) (black)
Growth above the midline of the channel (green icon) supports this possibility. A bullish break out of the channel would confirm this analysis and accelerate LINK's momentum towards $7.90 or even $9.48. On the other hand, the bullish scenario will be canceled in case of a bearish break out of the channel. Then LINK could drop to $6.40.
Source: Trading View
Thus, Chainlink's main outlook for February is bullish. A bullish breakout from the channel is expected and growth to $7.90 or even $9.48. Positive news about the project is also a support factor for the coin. On the other hand, a bearish breakout would neutralize this scenario and could trigger a fall towards $6.40.
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