Analyst Says Chainlik Price Could Crash 50% If This Level Fails

Overview

Chainlink is currently nearing a critical support level, which has raised concerns among analysts regarding potential downside risks. A recent technical analysis highlighted that if the price falls below this key area, it could lead to a significant bearish shift in market sentiment.

Technical Analysis and Market Sentiment

According to a recent analysis shared on X, a prominent crypto analyst noted that Chainlink’s price structure is becoming increasingly vulnerable. The analysis indicates that LINK is approaching an important support zone around $10. This area has historically provided structural support during various price pullbacks, making it crucial for maintaining a bullish outlook.

The analyst identified a head and shoulders formation on Chainlink’s weekly chart, a pattern that is typically associated with bearish market behavior. This pattern consists of three peaks: a left shoulder, a head, and a right shoulder. The left shoulder formed during the early stages of a market recovery, followed by a higher peak that represented the head, and concluded with a lower high marking the right shoulder. According to the rules of technical analysis, the confirmation of a head and shoulders pattern occurs when the price breaks below the neckline, which is currently situated in the $10 to $11 range.

While the price remains above this neckline, the bearish pattern remains unconfirmed. However, the analyst cautioned that a decisive weekly close below this critical support level could trigger a significant bearish sentiment in the market. If such a breakdown occurs, it could lead to a measured move that targets a price range of approximately $4 to $5, which would represent a substantial decline from current price levels. This outcome is described as the lowest potential price Chainlink could reach this year, contingent upon strong selling pressure.

Additionally, the analysis pointed out that there is an intermediate support level that might prevent LINK from plummeting to the $4 mark. A more conservative downside target is identified around $7.15, which aligns with the Point of Control on the Volume Range Visible Profile and overlaps with the accumulation zone observed from 2022 to 2023.

As of the latest update, Chainlink is trading at $11.98, showing a slight increase of 1.1% over the past 24 hours but reflecting a decline of 5.4% over the past week. A rebound from the neckline could shift the short-term outlook, potentially leading to a relief bounce in prices.

From author

The current analysis of Chainlink’s price action underscores the significance of technical patterns in predicting market trends. The presence of a head and shoulders formation raises critical questions about the strength of current support levels and the overall market sentiment. As traders and investors closely monitor these developments, the potential for sharp price movements remains a key focus.

Impact on the crypto market

• The potential breakdown below the $10 support level could create a wave of bearish sentiment across the market.
• A confirmed head and shoulders pattern could lead to increased selling pressure, impacting other cryptocurrencies.
• The identified price targets around $4 to $5 may influence trader strategies and market behavior.
• The intermediate support level around $7.15 could serve as a focal point for traders looking to mitigate losses.
• Overall market volatility may increase as participants react to these critical technical indicators.