Key Takeaways:
- Chainlink surged over 50% to reach $11.65, but it is now hitting overbought conditions.
- LINK price started a major rally after it broke a declining channel with resistance at $7.65 on the daily chart.
- The current RSI is well above 80 (the most since August 2020), signaling high chances of a pullback.
YEREVAN (CoinChapter.com) — Chainlink (LINK) rallied over 50% in a few days and climbed toward $12.00. The daily RSI is now above 80, and every time it crosses 70, the price drops significantly.
Chainlink Price At Risk of Sharp 25% Pullback
After a successful close above the 50-day simple moving average (blue) and $7.00, the LINK price turned green. The last swing low was $7.125 before the price started a fresh rally.
The recent rally started after Chainlink broke a declining channel with resistance at $7.65 on the daily chart. There was a strong bullish wave above the $8.00 and $8.50 resistance levels. Bitcoin price surge toward $35,000 and Solana’s rally to $32 also sparked bullish moves in LINK, pushing the price above $10.00.
The price traded to a new multi-month high at $11.65, and the daily RSI climbed above 80 (the most since August 2020). If we look at the RSI, every time it crosses the 70 mark, the price forms a short-to-medium term top and starts a fresh decline.
There are three such cases in 2023. The first crash was in April 2023, the second one was in July 2023, and the most recent one was in the first week of October 2023.
Therefore, the LINK price is now at a risk of a sharp drop of over 20%. Having said that, the current price action and market conditions are a bit different than the last three scenarios. If there is a pullback, the bulls might see it as a buying opportunity.
Initial support sits at $10.50 or the 23.6% Fib retracement level of the upward move from the $7.12 swing low to the $11.65 high. The first major support is at $9.40.
The main uptrend support and a possible fractal target based on the RSI study and channel pattern could be near the 61.8% Fib retracement level of the upward move from the $7.12 swing low to the $11.65 high at $8.85. Any more losses might send Chainlink toward the 50-day simple moving average (blue) at $7.50.
More Upsides in LINK?
Conversely, LINK might completely ignore the current overbought conditions and continue to rise. Immediate resistance is near the channel at $11.25. The first key resistance is near $11.85 and $12.00, above which the price could surge another 15%.
Overall, Chainlink’s LINK price is hitting overbought conditions and might just cool off a bit in the short term. It could even drop over 20% and test the $8.85 support, where the bulls could take a strong stand.
