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Chainlink (LINK) experiences a sharp pullback after a promising rally, signaling potential bearish pressure near critical resistance levels.
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The cryptocurrency’s failure to surpass the 200-day Exponential Moving Average (EMA) and a descending trendline suggests traders are cautious amid declining volume and active addresses.
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According to COINOTAG analytics, liquidation data reveals significant short and long position risks, underscoring heightened market volatility around the $14.25 support and $15.77 resistance zones.
Chainlink dips 5.25% after hitting resistance near the 200-day EMA; traders face liquidation risks amid declining volume and bearish momentum.
LINK Faces Increased Downside Pressure After Failing to Break Key Resistance
Chainlink’s recent price action highlights a critical juncture as it struggles to maintain gains following a 22% rally. The asset’s inability to break above the 200-day EMA and a descending trendline has triggered a 5.25% decline, with prices hovering near $14.40. This technical resistance has prompted traders to reassess their positions, contributing to an 11% drop in trading volume and a 13% decrease in Daily Active Addresses, as reported by IntoTheBlock. These metrics indicate a waning interest and reduced market participation, which often precedes further downside moves in volatile assets like LINK.
Liquidation Risks Highlight Market Sentiment and Potential Price Traps
On-chain analytics from CoinGlass reveal that the current price levels are critical for leveraged traders. The liquidation map shows nearly $2.90 million in long positions at risk if LINK falls below the $14.25 support level. Conversely, a breakout above $15.77 could trigger the liquidation of approximately $15.37 million in short positions. This imbalance suggests that the market sentiment is skewed towards a bearish outlook, with more capital positioned against LINK’s upside. Traders should monitor these liquidation thresholds closely, as they often act as catalysts for sharp price movements in either direction.
Source: CoinGlass
Technical Indicators Signal Potential Correction for LINK
From a technical analysis perspective, Chainlink’s price action has been marked by repeated rejections at the descending trendline and the 200-day EMA, which have acted as formidable resistance barriers. Each attempt to breach these levels has been met with increased selling pressure, resulting in a series of lower highs that align with a bearish trend. The current price behavior suggests that unless LINK can decisively close above $15.77 and sustain momentum, the altcoin may experience a further correction. Analysts point to a possible 10% decline, which could push prices toward the $12.70 support zone, a level that has historically provided buying interest.
Source: TradingView
Market Outlook and Strategic Considerations for Traders
Given the current technical setup and on-chain data, traders should exercise caution and consider the elevated risks associated with leveraged positions around the key support and resistance levels. A sustained break above $16 could signal a shift in momentum and potentially attract renewed buying interest, while failure to hold above $14.25 may accelerate downside pressure. Market participants are advised to monitor volume trends and liquidation data closely to anticipate potential volatility spikes. Risk management strategies, including stop-loss orders and position sizing, remain critical in navigating the uncertain environment surrounding LINK.
Conclusion
Chainlink’s recent pullback after a strong rally underscores the challenges of overcoming significant resistance near the 200-day EMA and descending trendline. The combination of declining trading volume, reduced active addresses, and concentrated liquidation risks points to a cautious market environment. While a breakout above $15.77 could alleviate bearish pressure, current indicators favor a potential correction toward $12.70. Traders and investors should remain vigilant, leveraging technical and on-chain insights to inform their strategies amid this volatile phase.
