Disclaimer: The information presented does not constitute financial, investment, trading or other advice and is solely the opinion of the author.
- Chainlink broke out of the 1.5-year range, suggesting a long-term uptrend has begun
- Buyers can wait for a dip toward the previous range highs before entering the market
Chain link [LINK] made huge gains in the past six weeks. The token was trading at $6 in late August, but shot up to $11.78 a few hours before press time and could go higher.
One measure pointed to an overvalued LINK and an impending correction. Although overall sentiment based on social media engagement remained solidly optimistic.
Read Chainlink’s [LINK] Price forecast 2023-24
An October 22 AMBCrypto report analyzing Chainlink’s lower timeframe price action highlighted that the $11-$12 region was a higher timeframe resistance zone. As things stand now, the $12 mark has not yet been crossed.
The long-term range was broken, but buyers should avoid FOMO
Source: LINK/USDT on TradingView
From a technical perspective, LINK’s recent breakout past the $10 mark was clean. On-Balance Volume (OBV) rose above a resistance level that lasted throughout 2023. The Chaikin Money Flow (CMF) signaled significant capital flow into the market, and the Relative Strength Index (RSI) stood at 78 on the three-day exchange. graphic.
This represented an overbought situation, but did not guarantee a major pullback. However, as of May 2022, there was a bearish order block on the one-day chart that stretched from $11.3 to $12.3. Bears could force LINK to return from this region.
A drop to the psychological level of $10 would be a good buying opportunity as it would also be a retest of the previous range high. Long-term buyers can wait for such a dip instead of looking for green candles.
On-chain statistics pointed to the accumulation of LINK, with the exception of one troubling observation
Source: Santiment
The Exchange Flow Balance metric saw major downward spikes in September, with the most recent occurring on October 13. Dormant circulation also rose higher that day. Supply on the stock exchanges also fell. The inference was that a large amount of LINK tokens were moved from the exchanges to cold storage.
How much is 1, 10 or 100 LINK worth today?
Still, the average coin age trended lower since mid-September, which contradicts the above conclusion. Instead, this measure showed some selling pressure persisting in the market despite recent gains.
Therefore, long-term holders could see some gains on the recent breakout, which meant LINK could see a correction in the coming days or weeks.