Is Chainlink’s losing streak now over, or will bears remain in control?
Chainlink’s LINK is correcting after facing a resistance
The weakness heightened after the Federal Reserve earmarked further rate increases
LINK’s weakness could continue until the token finds support, potentially at $7.4
Chainlink’s LINK/USD was rejected at $9.5 on August 12. That is the same level that rejected the token during the June surge. The decline could be due to profit-taking activity as there was no immediate trigger for the selloff. Following the latest rejection, LINK has registered a losing streak over the past one week. The token now trades at $8.09.
While most cryptos have been recovering lately, a major thorn now is how the Fed reacts to inflation. In a Wednesday’s statement, officials expressed the sentiment that inflation remains an issue. They called for further rate hikes. Crypto markets reacted by turning bearish, with LINK crashing by more than 3%. The depressed sentiment elicits more bear flags for LINK since the correction is yet to hit suitable support.
Chainlink’s technical outlook points to further correction
Source – TradingView
From the daily chart, LINK could find support at $7.4. The cryptocurrency is bearish after losing for the past five days. The momentum indicator crossing below the moving average points to a bearish view. LINK has also broken below the crucial 21-day MA, reinforcing short-term price depreciation.
If LINK breaks below $7.4, bears will take control and push the token back to $6. The token will have breached the 50-day MA and would welcome an accelerated selloff. We consider this scenario less likely unless the crypto sector experiences a prolonged downturn.
Concluding thoughts
Chainlink token could continue to fall further on a broader wave of crypto correction. The most likely zone for bullish reversal is $7.4. Investors should monitor price action as further decline could see it touch $6.0.
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