Chainlink (LINK) technical analysis: Is $7.12 the next support?

Disclaimer: This is not financial or investment advice. You are responsible for any capital-related decisions you make, and only you are accountable for the results.

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Overview

Chainlink ($LINK) has been a strong player in the cryptocurrency space since its launch in September 2017. Throughout its history, Chainlink has experienced multiple cycles of exponential growth and deep retracements.

After a significant breakout in 2021, reaching an all-time high of $53 in May 2021, LINK has been consolidating, forming crucial support and resistance levels.

As of now, Chainlink is trading at a pivotal point, attempting to break through key moving averages and resistances on both the weekly and daily timeframes, which could signal the next big move.

Weekly timeframe (logarithmic chart)

Chainlink's price action has demonstrated base-over-base formations, which is a bullish sign for long-term price movements. After the 2017-2018 rally, where LINK moved from $0.18 to $1.4, it saw a deep retracement of 87% but later pushed back to $5.1 in 2019. Since then, the asset has shown its strength with several bullish legs up, culminating in its 2021 high of $53.

Key weekly observations:

• 2017-2018 base: After the initial surge, LINK retraced down to $1.4 multiple times and established it as a crucial support level.
• Exponential rally: The breakout in 2021 took LINK to an all-time high of $53, marking a massive move from the $5.1 base.
• Current demand zone: Following its retracement from the ATH, LINK found strong support in a weekly demand zone ranging from $7.12 to $8.25, which has held price action in check over the past few months.
• Consolidation period: Between May 2022 and October 2023, LINK was locked in a tight consolidation range between $9.63 and $5.1, spending over 500 days within this range, signifying strong accumulation.
• Breakout: After breaking out of the range, LINK rallied 135% from $9.63 to $22.8 before retracing back to test the support zone at $9.63. Price wicked into the weekly demand zone but stayed above $9.63, forming a solid base.
• 200 EMA (weekly): LINK is currently hovering around the 200 EMA at $11.3, with price testing this level. If the price holds and breaks above, we could see a bullish continuation toward $18.3 and possibly beyond.

Next key levels:

• Upside: If the 200 EMA at $11.3 is flipped, LINK could rally to $18.3, followed by $22.8, the recent swing high.
• Downside: Strong support remains at $9.63, with further downside protection at the weekly demand zone between $8.25 and $7.12.

Daily timeframe (regular chart)

During the daily timeframe, LINK's recent price action has formed a bullish flag pattern, indicating potential continuation of the upside.

Key daily observations:

• 200 EMA (daily): Price is currently testing the 200 EMA on the daily, which sits at $12.75. Breaking and sustaining above this level will be critical for a further upside move.
• Bull flag formation: After reaching $22.8, LINK retraced in a controlled manner, forming a flag pattern. This kind of price action often signals consolidation before a breakout.
• Demand zone: The weekly demand zone also holds significance on the daily timeframe, adding confluence for the $7.12 to $8.25 range as a solid support area.
• Resistance levels: Immediate resistance lies at $12.75 (the 200 EMA), followed by $18.3 and then $22.8.

Potential breakout levels:

• Bullish scenario: If LINK breaks out of the bull flag and claims the $12.75 level, it could rally toward the $18.3 and $22.8 levels. A close above $22.8 would signal further continuation to the upside, with the possibility of testing the ATH around $53.
• Bearish scenario: On the downside, strong support lies at $9.63. If this fails, the demand zone between $8.25 and $7.12 will likely act as the next accumulation area.

Cryptonary's take

Chainlink is at a pivotal moment, trading around its 200 EMA in both daily and weekly timeframes. While Chainlink isn't the top meme play this cycle, its strong technical structure, coupled with key moving averages and demand zones, makes it an asset to watch.

If LINK breaks above the 200 EMA and consolidates, we could see a significant rally to $18.3 and eventually a test of the $22.8 level. However, caution is warranted, and we are monitoring whether the price can sustain momentum above key resistance levels.