Long-term indicators suggest that LINK will eventually break the resistance line. However, short-term signals are throwing some doubt on this possibility due to the break of the rising support line.
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LINK is trying to break north again
According to technical analysis of the weekly chart, LINK has been declining along the descending resistance line since May 2021. This decline in June 2023 took the market to a low of $4.75. At first, it looked like this would lead to a breakdown of the $6 horizontal area that has been present on the chart since May 2022.
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But then there was a quick recovery and the token returned to the $6 area, confirming it as a strong support level. This recovery canceled out the previous bearish breakout, which often leads to significant reversals, which is what happened with LINK.
The price is again attempting a breakout of the same descending resistance line. The last bounce from it occurred two weeks ago (red icons. This line is now 826 days old and is currently at $7.90.
A successful breakout and close above it would indicate the end of the correction and the start of a new uptrend.
A successful breakout and a close above it would signal the end of the correction and the start of a new uptrend.
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Source: TradingView
Weekly Relative Strength Index (RSI) supports the bullish scenario. This momentum indicator is currently rising and above the 50 mark. What’s more, it closed above 50 for the first time since September 2021.
Is the bearish breakout the start of a correction
In contrast to the weekly timeframe, the signals on the six-hour chart are bearish.
Since the formation of the first rising low on June 20, LINK price has rallied along a very steep upward support line. On Aug. 1, the token bounced off this support line, forming a bullish hammer candlestick (green icon).
The token bounced off this support line to form a bullish hammer candlestick (green icon).
It is characterized by a long lower wick and a bullish close. This means that buyers took the upper hand during the decline and got the closing price of the period to be above the opening price.
Two days later, however, the coin made a breakout of this line and is now turning it into resistance (red icon). This is the usual movement after a bearish breakdown, which is usually followed by a new decline.
The six-hour RSI, however, does support continued upward movement. The indicator is above the 50 level and rising, which is a sign of a bullish trend. In addition, it has broken the descending resistance line, indicating the end of the previous bearish trend.
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If LINK continues to rise, it will recover above the rising support line and may break above the mentioned long-term descending resistance line. In this case, a 140% rise to the next resistance level of $18 is likely.
On the contrary, a rebound could lead to a fall to the 0.5-0.618 Fibonacci retracement area at $6.20 – $6.60 level. This would represent a 14% decrease from the current price.
An increase of 14% from the current price.
Source: TradingView
The long-term outlook for LINK is thus bullish, and a break of the long-term resistance line is expected.
A failure to retake the short-term upward support line, however, will postpone this bullish breakout and could result in price first pulling back and only then resuming upward momentum. This decisive line is currently at $7.60.