Chainlink’s incredible rally over the past two weeks appears to be losing steam, with multiple sell signals flashing to warn of an impending correction for the blockchain oracle project.
After consolidating for months below $10, Chainlink’s LINK token went parabolic in late October, soaring as high as $17.19 on November 9th for a 90% gain in just two weeks.
According to respected crypto trader Ali, this vertical move has LINK extremely overextended and is ripe for a pullback based on analysis of the TD Sequential indicator. On the daily, 3-day, and weekly timeframes, TD Sequential presented sell signals, which often precede retracements.
The first critical support level to watch is the $12.50 area, which coincides with the .618 Fibonacci retracement of the recent advance. A daily close below this zone would confirm the start of a deeper correction.
More concerning would be a drop below the $10.50 support level that could pave the way for a decline back toward the multi-month trading range. LINK has gone parabolic on a number of occasions historically before retracing 50% or more.
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Of course, pulling back to recharge after such a strong impulse leg higher would be healthy for LINK in the bigger picture. But in the near term, substantial volatility and downside appear likely based on the bearish momentum signals.
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