Cryptocurrency markets suffered from a significant blowout over the weekend and Chainlink (LINK/USD) was no exception. After hitting its 200-day moving average just under $26.00 per token on Friday, it slumped as low as $15.00 per token on Saturday.
On its way down, the cryptocurrency broke below a key level of resistance in the form of the 22nd September low just under $21.00. This level, which coincides with the 50% retracement between the December high at $27.00 and the Saturday low at $15.00, acted as resistance for LINK/USD over the weekend.
Since topping out here on Sunday, the bears have remained in control and the cryptocurrency has ebbed lower, though it did manage to bounce at the 23.6% retracement between the December highs and lows at just under $1800. At present, LINK/USD is trading in the $18.00s. That means its losses on the month currently stand around 26%, while its losses since the November high now amount to over 50%.
What Next for LINK/USD?
As Chainlink takes a breather on Monday following the recent spike in volatility, cryptocurrency traders/investors will be mulling what is next for LINK/USD.
The most immediate levels of support and resistance will of course the aforementioned Sunday high at just under $21.00 (resistance) and the Monday lows in the $17.00s.
Looking at LINK/USD on the one-hour candlesticks, it does appear to be testing and threatening an upside break of a downtrend that had formed since the weekend. Such a break would likely see the crypto pair move back towards weekend high and perhaps on towards the 61.8% Fibonacci retracement of the December extremes, which sits in the $23.00s and close to the late-November lows.
LINK/USD’s 14-day Relative Strength Index score supports the idea that some consolidation/profit-taking on recent shorts should offer some support to the crypto pair in the coming sessions.
At 23.19, LINK/USD is more oversold right now than it has been at any other point over the past 15 months. Over that time period, the RSI has hit 30.00 (which technicians see as indicating that an asset has become oversold) on only two occasions. In both prior instances, this marked a near-term market bottom.
The weekend crypto market rout saw LINK/USD slip to the downside of a descending trend channel that had been suppressing the price action for the last few weeks. Sunday and Monday’s price action suggests that Chainlink has broadly failed to recovery back into this trend channel, a bearish signal that a further acceleration of recent losses may lay ahead.
Should recent bearishness persist, it won’t take much to push LINK/USD back to its Saturday lows at $15.00, a level which also coincides with a double bottom from back in May and June. A break below that would herald in further downside towards the July lows in the low $13.00s.