Chainlink’s correction could extend into another week if it weakens below critical support. While the daily 20-SMA (red) and $24-support could delay the inevitable, LINK would need to access ground above $28.7 to shake off its weak outlook. At the time of writing, LINK traded at $24.8, down by 4.1% over the last 24 hours.
Chainlink Daily Time Frame
Chainlink has shifted to its daily 20-SMA after trading at the upper end on its Bollinger Bands for the last two weeks. Its price now sits at a critical juncture, close to $24-support. Should bulls fail to snap a fresh higher high above $28.7, the market would bust wide open for sellers. Losses could extend to 21% if no pushbacks are offered at $23 and $20 support levels. In a highly bearish scenario, LINK could form a lower low around $15.
Meanwhile, a close above 11 January’s swing high of $28.7 would invalidate this thesis. Renewed bullish momentum would likely help LINK climb by an additional 25% and test a supply zone between $35-$38.
Indicators
LINK’s daily RSI has completed a full run-up from 30 to 70 between early December to 10 January. A close below the lower boundary of an up-channel showed that a breakdown was currently in progress. Bulls would have a small window of opportunity around the mid-line but expect sellers to pile pressure if the RSI slips below 45.
Furthermore, a sell signal formed on the daily MACD after the Signal line (orange) crossed below the Fast-moving line (blue). This bearish crossover was LINK’s first since 14 November 2021.
Conclusion
A daily close below the 20-SMA (red) and $24-support could develop into some unfortunate losses Chainlink this week. Bulls would have to remain vigilant going forward and only a move above $28.7 would rescue LINK from a bearish outlook.