Chainlink could provide buying opportunity before 50% rally

Source Fxstreet
  • Chainlink price likely to rally to local top at $20 after retesting previous support level.
  • High network growth and whales buying the dips suggest LINK is poised for a significant upswing.
  • A weekly candlestick close below $13.59 would invalidate this bullish thesis.

Chainlink (LINK) price has broken out of the downtrend from the ongoing consolidation and rallied 19%, where it is facing some resistance. A possible price correction to the major support area could be a buying opportunity for the investors before the second bullish leg. 

Chainlink price looks encouraging

Chainlink price crashed 49% from its local top formed on March 11 and stabilized between the $12.35 and $16.04 range. In line with general market conditions, LINK triggered a 19% rally, which ended the consolidation. During this ascent, the Oracle token decisively breached the 200-day exponential moving average (EMA), signaling a major shift in the momentum favoring bulls. 

While this move was bullish, Chainlink price is currently facing resistance due to a daily bearish order block where large market participants have previously placed sell orders at $17.58, which confluences with the weekly resistance level at $16.48. If the buyers fail to push LINK higher, a retracement is likely. In such a case, the volume profile indicator shows that the major chunk of the volume was traded at around $14.62 and could support the potential correction outlined above. The $14.62 level also coincides closely with the 61.8% Fibonacci retracement level, making it a good place to accumulate for the second bullish leg.

With the recent uptick in bullish sentiment due to Ethereum spot ETF approval, if Chainlink price can find support around $14.62, resulting in an 18% rally to $17.58, the previously mentioned daily order block. A flip of this level, in a highly bullish case, could send Chainlink price to $22, bringing the total gain to 50%. 

LINK/USDT 1-day chart
LINK/USDT 1-day chart

On-chain data from IntoTheBlock adds a bullish view for Chainlink. The number of active addresses increased dramatically from 2,900 on May 18 to 11,300 on May 21, implying a growing demand for the Chainlink network.

LINK Daily Active Addresses
LINK Daily Active Addresses 

Data from IntoTheBlock show that the large transactions volume indicator, which measures the daily average volume of transactions worth $100,000 or more, saw an unusual spike on April 13. This index is used as a proxy of whales’ investment. Typically, if this metric spikes after a rally, it can be assumed that institutional investors are looking to sell. On the contrary, if this index shows an uptick after a drop, it could mean that these whales are buying the dip.

In Chainlink’s case, the spike on April 13 corresponds to a potential buy-the-dip activity and can be viewed as a bullish signal.

LINK Large Transactions Volume

LINK Large Transactions Volume

Despite strong technical analysis and on-chain data, if the Chainlink price produces a weekly candlestick close below $13.59, it would invalidate the bullish thesis by producing a lower low on a higher timeframe. This development could see LINK price fall 13% to a key support level of $11.80.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
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