Home Altcoins News Chainlink Faces Critical Support Test Below $20

Chainlink Faces Critical Support Test Below $20

Chainlink price

Chainlink (LINK) is currently under significant bearish pressure, as the broader cryptocurrency market experiences a decline in valuation. After breaking key support levels, LINK is testing the $22 zone—an important threshold for maintaining the price above $20. The token’s price action and market sentiment suggest that unless bulls step in to defend this critical support, further declines could be on the horizon.

Chainlink Breaks Key Support Levels

Chainlink recently breached its $24 support following a bearish “change of character” (CHoCH) on its 4-hour timeframe, signaling a shift in market sentiment. This breakdown was followed by a test of the $22 level, a crucial support zone that determines whether LINK can stay above the $20 mark.

In technical terms, LINK has shown multiple breaks of structure (BOS) and equilibrium points, with the latest BOS pushing the price down toward $22. If buying pressure does not increase, the token could experience further declines below the $22 support, which might eventually push it toward lower supports beneath $20.

A Drop Below $20 Could Lead to Greater Losses

If LINK falls below the $20 level, it may trigger a more significant sell-off, potentially driving the price to the $18 level, which has acted as a support zone in the past. A sustained move below $20 would exacerbate bearish momentum and create additional downward pressure, likely leading to more losses in the near term.

On the other hand, if bulls can intervene and renew buying pressure, LINK could recover above $22, attempting to reclaim the previous resistance levels above $24. The token’s short-term trajectory hinges on its ability to hold above the $22 support zone and avoid further drops toward $20.

Declining Transaction Volume Raises Concerns

Despite a notable 103% increase in LINK’s transaction count in the past 24 hours, the overall weekly transaction volume has dropped by 53%. This sharp decrease in transaction activity could suggest waning interest or a consolidation phase following a significant spike. Historically, such a reduction in inflows has often been followed by further price declines.

If this trend continues, LINK could face continued downward pressure. The key question for investors is whether transaction volumes can stabilize or resume an upward trend, as this would be a critical indicator for a potential price recovery.

Diverging Sentiment: Retail Optimism vs. Professional Caution

A look at sentiment indicators reveals a divergence between retail and professional investors. While general crowd sentiment for LINK is moderately bullish at 1.65, market professionals, often referred to as “smart money,” have a more bearish stance at -0.76. This misalignment in sentiment suggests that while retail investors may be hopeful, the cautious outlook from professional investors could limit LINK’s chances for a near-term rebound.

Historically, when professional sentiment is bearish, it often precedes further declines, even if retail sentiment remains optimistic. This caution from “smart money” indicates that market professionals are wary of a continued downward trend for LINK.

Conclusion: Will LINK Hold Above $20?

Chainlink’s price outlook is uncertain as it hovers near critical support levels. If LINK fails to hold above the $22 zone and eventually drops below $20, it could see further losses. On the other hand, if bulls can defend these key support levels and renew buying pressure, LINK might see a recovery. Investors will need to keep a close eye on market sentiment, transaction volumes, and price action in the coming days to gauge the future direction of Chainlink.

As always, professional sentiment and the token’s ability to stay above critical support zones will be key to determining whether LINK can avoid a deeper decline or rebound toward higher resistance levels.

Read more about:
Share on

James

James T, a passionate crypto journalist from South Africa, explores Litecoin, Dash, & Bitcoin intricacies. Loves sharing insights. Enjoy his work? Donate to support! Dash: XrD3ZdZAebm988BfHr1vqZZu6amSGuKR5F

Crypto newsletter

Get the latest Crypto & Blockchain News in your inbox.

By clicking Subscribe, you agree to our Privacy Policy.

Get the latest updates from our Telegram channel.

Telegram Icon Join Now ×