Reaction Chain link (LINK) the price to the $7.40 minor resistance area could determine the direction of the next move.
LINK is Chainlink’s native token, a proof of stake blockchain network created by Sergei Nazarov. As of May 2022, the Chainlink price is trading above the $5.75 horizontal support area. Despite falling to a low of $5.30, the LINK price remained above the $5.75 support level. While it fell slightly lower in some cases, it did not close below the $5.75 area, which could trigger a collapse.
The weekly RSI has been in an upward divergence (green line) all this time. Such a large time frame discrepancy is unprecedented. As a result, it often occurs before a significant uptrend reversal. The fact that RSI moved above 50 further confirms this possibility.
If the uptrend continues, the next resistance level will be $9. The price has not closed beyond this level since May 2022. So a close above it could accelerate the move towards the next resistance at $18. This is in line with the weekly RSI readings. However, if the price of the LINK token closes below $5.75, it could drop to the next support at $4.30.
Chainlink (LINK) drops after rejection
Despite the bullish forecast on the weekly timeframe, the technical analysis on the daily timeframe shows weakness. This is evident in both the bearish divergence in the daily RSI and the rejection of the $7.93 resistance formed by the 0.618 Fib (white) retracement resistance level. While the LINK price initially rose above the area, it formed a long upper wick and then fell.
The LINK price also follows a descending resistance line which is currently close to $9. This adds to the importance of the $9 resistance area outlined earlier.
Therefore, a future trend can only be considered bullish when the LINK breaks through this confluence of resistance levels.
Chain link (LINK) in a key short-term pattern
Finally, the short-term six-hour timeframe shows that the LINK price is at a key level. There are two main reasons for this.
First, the price is just below the $7.40 horizontal area. This area previously provided support and has now apparently become resistance. Therefore, whether the LINK price recovers or rejects it can determine the future trend.
Secondly, the price is moving in a descending wedge which is considered a bullish pattern. If the LINK price breaks out of it, it will also recover the $7.40 resistance area. This may happen within the next 24 hours.
However, if price breaks out of the descending wedge, it could fall to the 0.618 Fib retracement support level at $6.53.
All in all, whether the Chainlink price breaks out or breaks out of the current wedge pattern can determine the future trend. A breakout could lead to an attempt to break above $9, while a breakout could lead to a drop to $6.53.
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