Chain link [LINK] is among the best blockchains used in tokenization and borderless money transfers. However, LINK is down about 4% in the last 24 hours while trading below the 200-day MA.
However, LINK’s price weakness appears to be coming to an end, at least in the short term. This is why Chainlink is about to see a bullish reversal.
Sellers lose steam as LINK rejects support for the third time
LINK’s price broke below an ascending trend channel in late May. This move coincided with the broader crypto market which has been weak since late last year, although activity continues to boom.
After the outage, sellers pushed the altco to the February low of $7,265, but faced a minor rejection. The recovery pushed the price above $8, but it has since returned to this support level and appears to be holding.
This is the third time the $7.20 support has been reached, and it looks like sellers are losing steam. For example, the momentum indicator is declining and has turned negative.
More analysis on a smaller time frame shows that sellers are indeed becoming exhausted. The four-hour candles are consolidating around $7,280, with the MACD bars weakening. That means salespeople are becoming exhausted.
However, LINK price has bounced back from the 0.618 Fibonacci retracement level, indicating that the continued decline could be strong in hindsight. But a continuation of the downtrend depends on LINK breaking below the $7.20 zone.
Moreover, total liquidations have decreased sharply. This is an indication that volatility has also decreased, a signal that precedes expansion.
For example, on June 25, more than 1 million LINK worth of leveraged long orders were liquidated on Binance’s perps market. But in forming the potential bottom in the $7.20 zone, only 120K LINK has been wiped out.
Can Bullish Signals Cause a Price Reversal in LINK?
While the price action is starting to indicate a possible bullish reversal, the on-chain metrics are also starting to align.
For example, Chainlink Spot ETFs turned positive again after posting their first daily outflows of $490,000 on June 22. This was after $138,000 flowed into the ETFs the next day, easing the bulls.
LINK ETFs were among the best performing altcoin ETFs, but now only Avalanche [AVAX] Spot ETFs have not seen any outflows since their debut.
More importantly, demand for LINK is high and reserves are reaching a new peak. In the month of June the Chainlink Reserve accumulated 593,088 LINK for over $4.60 million. The total holdings stand at 4,504,167 LINK, which helps create a supply crisis.
Overall, these bullish signals could help the altcoin see a bullish reversal. However, LINK should remain above the $7.20 zone.
Final summary
- Chainlink signals a potential bullish reversal as the bears lose momentum, but the price should remain above $7.20.
- LINK ETFs turned positive again after their first outflows since their debut, while Chainlink Reserve grew by $4.60 million this month.