Aaryamann Shrivastava
FXStreet
- Chainlink price declined by more than 6% in the last 24 hours after failing to breach the resistance at $8.27.
- There is a risk the altcoin could lose the 200-day EMA as support.
- If the cryptocurrency bounces off the support at $7.53 and rallies beyond $9.33, the bearish thesis would be invalidated.
Chainlink price showed positive upside earlier this week, however, right after marking a three-month high, LINK slipped on the charts and is now near to falling through an important support floor, which could trigger further bearishness for the altcoin.
Chainlink price reverses uptrend
Chainlink price fell by more than 6.4% in the last 24 hours, from $8.01 to trade at $7.45 at the time of writing.
This contrasts with the previous week, ending February 20, when LINK made a significant recovery after a nearly 22% rally, even testing the resistance level at $8.27.
The peak in the rally coincided with a bullish divergence between the price and the Relative Strength Index (RSI) momentum indicator. Whilst Chainlink price made higher highs, the RSI did not, indicating a lack of momentum in the final push and underlying weakness.
This eventually bore fruit in decline, causing Chainlink price to test the immediate support level at $7.53, near where it is trading at the moment. This level also coincides with the 200-day Exponential Moving Average (EMA), making it a crucial support floor.
Losing this support would result in LINK falling all the way down to $6.77, which marks another critical support level for the altcoin as it coincides with the 50-day and 100-day EMAs.
A break below this support level would lead to Chainlink price declining below $6.00 to test the support level at $5.90.
LINK/USD 1-day chart
Traders looking to short the cryptocurrency should be cognizant of the fact that Chainlink price might bounce off the 200-day EMA, from where the start of a new rally could take place.
To secure a positive momentum going forward, LINK needs to flip the resistance level at $8.27 into a support floor. Such a move would give the cryptocurrency the boost it needs to rally up to the critical resistance at $9.33.
A further breach above this level would invalidate the bearish thesis and enable the altcoin to test the $10.00 mark.
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