Market Direction

LINK is overbought and setting up for a cool-down

Updated: Aug 23, 2024

Published: Oct 25, 2023

LINK has been on an impressive vertical move higher, leaving traders dizzy with its ascent. However, signs of exhaustion are starting to show that this parabolic surge may soon hit a wall of resistance. Let's analyse the critical technical levels for LINK.

TLDR

LINK surged above $9.67 resistance.
Daily RSI is severely overbought at 82.
Funding is very positive, long bias vulnerable.
Expect pullback after an overheated vertical rally.

Disclaimer: Not financial or investment advice. You are responsible for any capital-related decisions you make, and only you are accountable for the results. “One Glance” by Cryptonary sometimes uses the RR trading tool to help you quickly understand our analysis. They are not signals, and they are not financial advice.

Technical analysis

Undoubtedly, LINK has had a phenomenal move higher. It has managed to get above the $9.67 horizontal level and has tested it as support in the past few days, which is a positive sign.

In terms of technical analysis formations, we’re not getting much; this has essentially gone straight higher. We would expect a deeper move lower in the coming weeks, again, unless more positive BTC ETF news comes out.

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RSI and funding rates

With a daily RSI at 82 and 87 on the 12-hour, this is massively overbought. If price puts in a higher high today, this would also form bearish divergences on the 12-hour and the daily timeframes. This would be bear divergence in heavily overbought territory. This SHOULD help push price more meaningfully lower in the coming weeks.

Funding is very positive. Alongside this, open interest is up massively. This suggests that there is a significant bias to long, and therefore, longs may be vulnerable here.

Cryptonary’s take

“LINK is likely to be a great play for the long run, with price targets in the next bull run north of $50. However, in the coming weeks and months, we believe LINK will pull back from the current price point of $11.16.” This conclusion remains the same, and in fact, the argument to see LINK pullback more meaningfully has actually strengthened in the last day or so.

Action

LINK will likely perform well in the long run, with bull market targets north of $50.
In the short run, we’d expect a pullback in price. We have identified the yellow boxed area as an area to buy LINK for the long term.
We remain cautious about adding/longing LINK here. If anything, we’d potentially reduce our exposure slightly. But, if you’re more passive, this may not be worth doing as we expect further upside in the long run.