Chainlink Tests Critical Support as DeFi Integration News Meets Technical Crossroads
Market Structure Shifts Higher
- Currently, LINK is trading at $14.15, which is a 10.86% decline over the past week.
- This, despite the significant announcement of a Mastercard partnership.
- The Relative Strength Index (RSI) is neutral at 44.21, and though it has room for some improvement, the 5-day moving average resistance will most likely prove too strong for a short-term breakout.
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| Metric | Value |
|---|---|
| Asset | CHAINLINK (LINK) |
| Current Price | $14.15 |
| Weekly Performance | 4.89% |
| Monthly Performance | -10.86% |
| RSI (Relative Strength Index) | 51.3 |
| ADX (Average Directional Index) | 25.6 |
| MACD (MACD Level) | -0.16 |
| CCI (Commodity Channel Index, 20-period) | 103.87 |
Momentum Resets to 44.21 After Touching Oversold Territory
The Relative Strength Index stands at 44.21 daily, showing a bounce from more oversold levels but still indicating a preponderance of sellers. This level suggests that there is neither a clear advantage for the bulls or the bears – the indicator is in that nether region where both re-entries and reversals are viable setups. The interesting aspect is the behavior of the RSI during the drop: It fell as low as the high 30s before turning higher – a similar reading to the low part of August’s flush, which came before a 30% surge.
Comparing to history, a similar RSI configuration in February and March meant the market needed to test dip buyers with a fresh low below $30 before market structure could properly reset for bullish progress. That scenario remains equally possible today. Frustratingly for any bulls who got long near $50-60 and got stopped out into the Mastercard news, the most advantageous buys could actually be at lower levels below $30. Emotional, aggressive trading frequently leads to high-probability areas being retested. Sit tight.
ADX at 25.58 Signals Trend Strength Building From Compression
With the ADX crossed above 25, it indicates that the trend is now strong enough to carry positions in the absence of other factors. The results here are definitely mixed but most are slightly positive (for bulls) and not statistically significant (for bears). The next table is the same statistics but the ADX must be below 25.
In other words, the ADX shows a transition from ranging to trending environments, but we don’t know the actual direction of the new trend yet. This indicates that the current move is strong, whether it’s the selling trend, or the potential new uptrend caused by the increased volatility from the DeFi announcement. As a result, day traders will want to tweak their tactics and follow momentum signals instead of hunting for bounces in the oversold or overbought zone, which become less likely in higher volatility.
20-Day EMA at $15.75 Caps Rally Attempts as Resistance
The 10-day has dropped below the 20-day in a bear cross and look to establish themselves as immediate resistance points at $14.10 and $15.75. This is in addition to the 61.8% Fib retracement level of the recent rally near $14.50. The continuing downtrend is reinforced by the daily MACD and RSI which are in a bearish divergence and deep overbought regions, respectively.
The expanding 10/50-day moving average ‘golden cross’ is still several weeks away from signaling but price needs to recover multiple key levels before that occurs. Until then, this appears to simply be a bear flag on a ramp toward forming a death cross assuming that 10/50-day support continued to hold around $14.10.
$13.44 Support Faces Crucial Test as Resistance Stacks Above
There is a strong resistance area ranging from $15.75 to $16.01, where you can see the 20-day EMA meeting the monthly pivot point. Next, the 50-day EMA, standing at $17.17 will act as a resistance level, thereafter, the $18 psychological level will also keep a lid on any upward movement considering it was a support before turning into resistance levels. In case all the above levels are crossed, the monthly R1 pivot at $20.88 will limit further upside.
Bulls have defended several support levels below the current price, the most crucial being $13.44 which has been tested six times since late November and maintained on each occasion. Below this, the yearly low at $10.48 forms a solid base, though that is roughly 26% below the current price levels. The $11.60 weekly low also serves as interim support if $13.44 gives way.
The market may remain under pressure unless buyers thrust the price above the 20-day EMA and then $15.75. If that happens, the protocol may start its journey to $21.50 and then $25. Long-term investors may see a breakout above $25 as an opportunity to book profits gradually. The RSI is attempting to turn up and the 20-day EMA is sloping up, which suggests that buyers have the upper hand. A breakout and close above $15.75 could be the first sign that the correction may be over.
Bulls Need Convincing Close Above $15.75 to Shift Momentum
If the price manages to rise above the 20-day EMA at $15.75, the next stop could be the 50-day EMA at $17.17. In the meantime, positive news on the Mastercard-Swapper Finance ecosystem will continue to act as a catalyst for further development. A move above $15.75 would change the short-term outlook to positive and could lead to short sellers exiting their positions, which might push the price towards the $18 handle.
If this happens, the previously mentioned pullback zones at $11.60 and $10.48 are likely to be visited for another 20% retracement. A low volume node extending from $12 to $11 should provide minor support but below that the VPVR shows little in the way of bids below $11.60.
Based on the technical setup and the lag effect between good news and price reaction, the most probable short-term direction will be sideways with bounds of $13.44 and $15.75. This will give the market time to incorporate the Mastercard news. Since the ADX reading indicates the consolidation shouldn’t take much longer time, a break above or below seems likely. I expect that to happen the next 3-5 days.
