The well-known digital asset industry oracle continues to grow as the months go by. However, like the rest of the market, its price keeps falling. In the context of strong selling pressure which is explained by the current macroeconomic context, will the decline continue over the next few months? Let’s head over to the charts to try to establish the most likely scenario for the coming months.
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An asset back to 2020 levels?
After an all time high of $53 in May 2021, the asset has been in a weekly downtrend. Closing twice below the $33 area, the latter acted as resistance. A selling force has emerged with an acceleration of the downtrend. You can see this with the oblique resistance which materializes the formation of descending tops.
After the bearish breakout of its support at $12, LINK moved fairly quickly to a second support zone where it had recorded low points several times during the year 2020. Now, it remains to be seen whether this level could let go by letting the asset continue its fall.
Since we are currently in a downtrend, the probabilities of a breakout of the current support are to be considered with a return, at least, to 4.85 dollars. This level, corresponding to a resistance in 2020, was never retested after its breakout. So, in the event of a break of the current support, investors will have to cross their fingers that the price will react here.
Can we envisage a short-term rebound of the LINK?
What we can see now is the rapid reintegration, on a daily basis, of the daily key level after a powerful wick of liquidation. Although the trend is bearish, if bitcoin does not decide otherwise, we can see an upside correction from the current downtrend.
What do I mean by that? After the powerful decline in the markets, we must have in mind a correction of this trend to come and seek the remaining liquidity. As it stands, watch for a close above $7.97 on the LINK, a level that is currently resistance in H4. In the event of a favorable daily close, we can opt for a return on the daily liquidity gap (9.31 to 9.85 dollars).
The best scenario for this correction would be for the price to return to the supply zone (at least $11.10) to close the remaining orders. Moreover, this zone converges with a double technical zone that works in favor of the sellers as a resistance. Note that in the current context, a LINK that closes clearly above $12 to reverse the downtrend would be overly optimistic. Thus, the bullish objectives which are, I remind you, against the trend, must remain reasonable.
LINK underperforming against the king of cryptocurrencies?
Sometimes it seems interesting to me to produce an analysis against bitcoin. Why ? It was the old unit of measurement for altcoins before stablecoins came to market. On the chart, you can quite easily see the change in trend. After a bullish period from August 2018 to December 2020, LINK is now in a bearish trend against bitcoin. You can see this trend with descending lows and highs.
What is the plan for the future? If the current level drops at 2427 satoshis, LINK will continue to underperform against bitcoin. This will mean a probable return to 1545 satoshis. In fact, the trend could even continue for many months with a return to 830 satoshis and 579 satoshis. Of course, don’t worry, we’re not there yet.
The objective of this LINK/BTC part is to highlight the underperformance of the token against the king of cryptocurrencies. So, what to deduce? If bitcoin goes down, LINK will be the first to be impacted. But if bitcoin goes up, the performance of the LINK will not be amazing. This trend could be reversed if the asset manages to recover 3950 satoshis, a level that corresponds to the previous weekly high.
Here we are at the end of the analysis of the LINK against the dollar and bitcoin. For the moment, you should remember that the king of oracles is underperforming against bitcoin and in a downtrend against the dollar. The macroeconomic backdrop is clearly unfavorable to the expansion of digital assets. However, given the rapidity of the downtrend over the past few weeks, we need to consider a potential near-term reversal for an upside correction. At the moment, the environment is uncertain. It is not impossible to have a decline to the levels indicated in the analysis without making the expected upside correction.
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