Will Chainlink Price Slip Below $20 Amid Emerging Bearish Pattern

• The Chainlink price formed a bearish head and shoulders pattern, which could precede a drop to $15.
• LINK’s network activity has also declined significantly, favoring the bearish outlook.

Chainlink (LINK) was showing bearish signs with a clear head and shoulders pattern forming on its daily chart. The most recent rejection at the $26 level led to a 12% drop in the Chainlink price in the last three sessions. It provided another opportunity for sellers to flip the $20 support level to resistance.

Following a four-day continuous selloff, the LINK price dropped to $21 at press time, noting a decline of over 7.20% intraday. Its market cap fell to $13.54 Billion, ranked 13th among the top crypto coins.

Chainlink Price Formed a Head and Shoulders Pattern

Chainlink crypto formed a head and shoulders pattern on the daily timeframe chart. It signals a downward move ahead.

For the bearish scenario to materialize, the LINK price first breached the neckline support of $20 and traded above it. Once this key level breaches, a decline toward $15 followed by $12 can be anticipated in the coming days.

Prominent crypto analyst Ali Charts adds weight to the bearish thesis, saying that a successful breach of the neckline could trigger an aggressive selloff. Besides, the token may slip toward the $14 mark.

LINK’s Network Activity Plummets

Data from IntoTheBlock shows that LINK’s new addresses have dropped by over 14.27%. Moreover, its active addresses have dropped by over 24%, which signals a reduced network activity. That could favor the selloff and may lead to price weakness ahead.

Also, the large holders have kept on selling their assets, putting pressure on the Chainlink crypto.

Data shows that the large holders’ netflow has decreased by 4.11% intraday and 23% in the last three sessions. This decline implies that smart money has exited which affects the altcoin price.

LINK Price Prediction: A Strong Correction Ahead?

Over the past two weeks, the Chainlink price has continued to face significant selling pressure and traded downwards. It has declined to the 50-day EMA mark and was hovering near the $20 crucial support zone.

With the emergence of the head and shoulders pattern on the daily timeframe, existing holders have continued to book their gains off the table. That shows waning investor confidence.

Additionally, the Relative Strength Index (RSI) line dragged below the 50 threshold and indicates a bearish crossover. It signals the momentum is weakening and the altcoin could face pressure in the coming days.

The Chaikin Money Flow (CMF) indicator had a reading of -0.08. It implies liquidity exit from the market. It suggests that selling pressure could intensify ahead.

With the bearish technical indicators, it looks like Chainlink crypto could extend the fall and may see significant correction ahead.

Dwindling Funding Rate Hints at Doubts

Amidst the weekly price decline of over 12%, the demand for long contracts has reduced significantly, as evidenced by the decline in the OI-weighted funding rate. At press time, the funding rate value reached close to zero, at 0.0078%.

The shift from positive to negative funding rates aligns with the expectations of more downside. Alongside the bearish sentiment observed by funding rates, the Open Interest (OI) has fallen in tandem with the Chainlink price, which denoted bearish sentiment in the futures market.

Disclaimer

This article is for informational purposes only and provides no financial, investment, or other advice. The author or any people mentioned in this article are not responsible for any financial loss that may occur from investing in or trading. Please do your research before making any financial decisions.