Chainlink (LINK) Needs to Decline Before Another Price Jump

• Michaël van de Poppe suggests Chainlink (LINK) may continue its current path.
• LINK encountered significant resistance slightly above the $8 mark.
• LINK may dip under $6.20 due to existing selling pressure.

Michaël van de Poppe, a seasoned analyst and the founder of MN Trading, recently shared his insights with his substantial Twitter following of 663,200. He suggested that the course of Chainlink might continue on its current path. In his analysis, Poppe pointed out that LINK encountered significant resistance, slightly above the $8 mark.

Lows Before the Highs

The expert suggested that the digital asset, fundamentally grounded on Oracle solutions and potential applications within the decentralized ecosystem, could maintain its position around an elevated low.

To provide some background, a ‘higher low’ is used in the crypto industry when a cryptocurrency’s price hits a new low higher than its previous low without being undercut by a lower low. This price trend is typically a precursor to a bullish run, signaling a potential entry point for investors. Poppe underscored this potential in his analysis.

Before his most recent post on Twitter, Poppe had been actively promoting LINK to his followers, frequently labeling the token as underpriced. Nonetheless, the token’s recent price fluctuations have sparked doubts regarding its capacity to surpass a significant resistance level above $8.

At the analysis point, the 4-hour chart for LINK/USD had developed a bearish pattern. As Poppe highlighted, the token had also established a new lower low, dipping below the $7 mark. However, LINK might resist a further 10% drop if bulls regard the $6.79 level as a potential entry point.

Should there be a surge in demand, LINK could retest the $7.06 mark, propelling its value upwards. However, insights from the On-Balance-Volume (OBV) suggest that LINK may continue encountering selling pressure.

A drastic fall could be forthcoming

This is because LINK ended at a value lower than its previous low on August 15, indicating a potential bearish divergence that could trigger another significant drop in price. However, should the price fall to the $6 or $6.20 mark, bullish investors could dominate the market. Given LINK’s past performance, this could catalyze a prolonged upward trend.

Simultaneously, the growth potential is contingent on the determination of bullish investors to either safeguard the $6 mark or surrender it to bearish investors. Another key metric to consider is the Directional Movement Index (DMI).

At the point of analysis, the Positive Directional Movement Index (+DMI), depicted in green, stood at 7.26, whereas the Negative Directional Movement Index (-DMI), represented in red, was significantly higher at 35.21. This substantial disparity in the directional indices suggests a dominant presence of sellers in the market. This is typically interpreted as a bearish or sell signal in cryptocurrency trading.

Additionally, the Average Directional Index (ADX) stood at 42.06. This elevated ADX value (highlighted in yellow) indicates a robust downward trend in the market.

LINK is poised to dip under the $6.20 mark due to existing selling pressure. Nevertheless, this $6.20 threshold presents a viable entry point for traders seeking to capitalize on short-term profits.