In the recent trading sessions, Chainlink (LINK) has been showing a bullish trend. It witnessed a significant rebound from the $5 support level and has since continued on an upward trajectory.
Over the past week, LINK has gained more than 12%, although the daily chart indicates a slowdown in gains. The coin formed a bullish reversal pattern, which led to a significant price hike.
LINK’s technical outlook reflects bullish strength, albeit with a slight decrease in demand and accumulation on the chart. In recent trading sessions, LINK has formed a pattern that indicates a possible reversal in the price direction.
To prevent this reversal, it is imperative that LINK maintain its upward movement and break through the immediate resistance levels. In addition, a slight decrease in the market value indicates a decrease in buying power.
Chainlink Price Analysis: 1-day chart
At the time of writing, Chainlink (LINK) is trading at $6.90 USD. The coin showed significant bullish strength after its recent reversal from the $5 level, prompted by the inverted head and shoulders pattern formation last week.
However, despite the bullish rally, LINK could face resistance around the $7.30 level, which has been a strong ceiling for the coin.
This resistance is further supported by the formation of a double top pattern (marked in red), which is a bearish signal.
As a result, there is a possibility that LINK may experience a decline towards the local support level of $6.60 and possibly further to $5.80 before attempting a recovery again.
Technical Analysis
During the formation of the double top pattern, there was a noticeable decrease in buying power, which indicates an imminent bearish price movement. The Relative Strength Index (RSI) has indicated a bearish divergence, indicating a decline in demand.
Although the RSI remained above the half-line, the readings indicated fading buying strength. Despite this, LINK managed to stay above the 20 simple moving average (SMA), which indicates that the buyers are still in control of the price momentum.
However, if there is a decline from the current price level, it could send LINK below its 20-SMA (red), which could bring sellers back into the market.
On the one-day chart, the altcoin is showing buy signals, although these signs were slightly declining.
The Moving Average Convergence Divergence (MACD) indicator, which reflects price momentum and trend reversals, formed a declining green histogram, indicating a possible decline in buy signals.
In addition, the Bollinger Bands, which indicate volatility, are wide open, which indicates the possibility of significant price fluctuations in the upcoming trading sessions.
Featured image from UnSplash and charts from TradingView.com
