Chainlink (LINK), one of the prominent altcoins in the crypto market, is currently facing growing pressure from sellers after a short-lived rally. The digital asset recently dropped by over 5% in 24 hours, and technical indicators now point toward a potential move further downward if bulls fail to reclaim a critical resistance zone.

After climbing nearly 22% in recent weeks, Chainlink’s upward momentum has slowed. The price struggled to overcome the $16 level, which coincides with a long-standing descending trendline and the 200-day Exponential Moving Average (EMA). These technical barriers have historically acted as strong resistance zones, and once again, they appear to have held back LINK’s advance.

A Rally Cut Short

Chainlink’s price action over the past two months had shown signs of recovery, attracting attention from both retail and institutional investors. However, as LINK approached the $16 mark, sell pressure increased. The result was a rejection from this level, leading to a sharp 5.25% dip to around $14.40.

This latest correction was accompanied by a noticeable drop in trading volume, indicating reduced interest among market participants. Data from IntoTheBlock shows a 13% decline in Daily Active Addresses, signaling that fewer users are interacting with the Chainlink network.

Investor Sentiment Tilts Bearish

In addition to the technical rejection, sentiment among traders has also shifted. On-chain analytics firm CoinGlass reported that short positions have grown steadily, indicating that traders are positioning themselves for further downside.

The current market setup reveals key liquidation levels: $14.25 as support and $15.77 as resistance. If LINK’s price drops below the support, around $2.9 million in long positions could be liquidated. On the flip side, if bulls reclaim the resistance, short positions totaling more than $15 million could be wiped out.

This discrepancy reveals that more capital is currently positioned against LINK than in its favor. It also suggests that traders lack confidence in the altcoin’s ability to break out above its near-term ceiling.

Price Rejected at Critical Trendline

From a technical analysis perspective, LINK is repeating a pattern that has played out multiple times since the beginning of the year. The descending trendline, in combination with the 200-day EMA, has acted as a ceiling for price rallies.

Each time the asset nears this confluence of resistance, it meets strong selling pressure. The latest rejection is the third time LINK has been unable to cross this level, further confirming the downtrend.

If this pattern continues, and Chainlink is unable to flip the $15.77 resistance into support, a deeper correction to around $12.70 could occur. That would represent an additional 10% loss from current prices.

What Lies Ahead for LINK

For now, Chainlink’s price is consolidating near the $14.25 support. This level is important for short-term momentum. If buyers step in and defend this zone effectively, LINK could rebound and make another attempt at breaking above $16.

However, a failure to hold this support could lead to a slide toward $13 or even lower, especially if overall market conditions remain weak.

On the bullish side, a confirmed breakout above $16 with strong volume could shift sentiment. This would invalidate the descending trendline and potentially open the door to a move toward $18 or higher in the coming weeks.

Macro Trends May Influence LINK’s Direction

Beyond Chainlink’s own chart, broader crypto market dynamics and macroeconomic conditions are also influencing price action. Bitcoin’s struggle to maintain gains above $105,000 and growing uncertainty around interest rate decisions in the U.S. have kept risk assets under pressure.

As long as Bitcoin continues to face resistance, altcoins like Chainlink may find it difficult to sustain upward momentum.

In addition, recent geopolitical developments and economic tensions between the U.S. and China are impacting investor sentiment globally. These factors can contribute to market volatility, especially in assets like cryptocurrencies that tend to be more sensitive to macro trends.

Final Thoughts

Chainlink remains a significant project in the blockchain space, particularly for its decentralized oracle network. However, in the short term, price action is heavily influenced by technical resistance levels and broader market sentiment.

To regain upward momentum, LINK must break above the $16 level convincingly. Until then, caution remains the keyword for traders and investors alike.