Chainlink Technical Analysis: LINK squabbles under heavy selling pressure, downswing targets $16

• LINK/USD is on the verge of a breakdown amid the formation of a rising wedge pattern.
• Chainlink whales are offloading their tokens after the price hit a new all-time high, adding to the selling pressure.

Chainlink is up 10% in the last 24 hours and a whopping 52% in the previous seven days. After breaking above $20, LINK soared to a new record high at near $24. Meanwhile, the uptrend seems to have hit the ultimate point, as selling pressure finds its way back into the market.

Chainlink's correction from a new record high in the offing

At the time of writing, LINK is trading at $22.2. This follows a correction from the all-time high. Support at $22 must remain intact to avert potential losses. However, selling pressure is likely to continue building, especially with the formation of a rising wedge pattern.

Chainlink is exchanging hands at the pattern's apex, suggesting that a reversal is in the offing. The bearish outlook comes into when an asset's price ascends with pivot highs and lows. Trendlines drawn along the peaks and lows converge at a single point referred to as the apex.

A breakdown usually occurs before the trendlines meet. The distinctive breakdown is mostly confirmed by decreasing volume (highlighting a divergence between volume and price). These breakdowns are typically fast and drastic and must be caught at the right time to ensure traders benefit greatly.

LINK/USD 4-hour chart

Santiment's holder distribution chart shows that the selling pressure above Chainlink intensified dramatically over the past week. The behavioral analytics firm recorded a significant spike in the number of addresses with millions of dollars in LINK, colloquially known as "whales."

The number of addresses holding between 10,000 and 100,000 LINK dropped significantly from 2,880, recorded on January 8 to 2,851 at the time of writing. Simultaneously, the number of whales having between 1 million and 10 million LINK fell from 55 to 51 in the same period.

At first glance, the recent decrease in the number of large investors behind LINK may seem insignificant. However, when considering that these whales move huge Chainlink volumes, the sudden spike in selling pressure can translate into a downward price action to $16.

Chainlink holder distribution

It is worth mentioning that the bearish outlook will be abandoned if Chainlink holds support at $22. Rebound to the all-time high could also validate a spike toward $30. Note that the price is trading above all the three moving averages on the 4-hour chart. Thus the odds are somehow still in favor of the bulls.