LINK surged 60% in 6 days: What's next for this rising star?

But let’s find out what the charts say!

TLDR

• Chainlink (LINK) has experienced a rapid 60% surge in six days, signalling potential overbought conditions.
• Technical analysis suggests caution, with $9.67 as a short-term correction level and mid $8's for a longer-term correction.
• The RSI indicator indicates overbought territory and a bearish divergence on the 12-hour chart, suggesting a possible short-term decline.
• Funding rates are at a four-month high, indicating a crowded Long trade, prompting a cautious approach to further Long positions.

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

LINK, like SOL, has been able to hold up at higher levels, previously using the horizontal line of $9.67 as new support that helped price move into the $10s. We now have a higher high, but with sellers turning up in the $11 area. Price-action-wise, we would be cautious here; LINK looks somewhat exhausted to the upside. 

RSI and funding rates

The RSI and the fact that LINK has moved up 62% in 6 days is why we remain cautious here. Just that sentence should provide some perspective here.  

But, when looking at the RSI, we’re well into overbought territory and have created a bearish divergence on the 12-hour timeframe. We feel this should help LINK move lower in the short term. 

Funding is still very positive and at a 4-month high. This suggests the crowded trade is to be long. And therefore, we should be cautious about longing this. 

Cryptonary’s take

We would exercise caution here on LINK. The market, in general, is overheated. And with LINK being up 60% in 6 days and its technical indicators at overbought levels, you should be cautious here and, at the very least, not add fresh longs into this.

Action

• LINK is up 60% in less than a week. Moves that go straight up aren’t usually sustainable.
• We expect a pullback in the near term or even a greater correction in the medium term. 
• We eye the $9.67 level as a short-term correction and the mid $8’s for a longer-term correction.