Chainlink (LINK) price has bounced for the fifth time on an ascending support line for 223 days.
The LINK token is the native token of the Chainlink network, a decentralized oracle network that deals with smart contracts. LINK price has reached a long-term diagonal support level. Whether it breaks or bounces from it may determine the direction of the future trend.
Chainlink price surges on rising support
Technical analysis on the daily time frame shows that LINK price has gained momentum since May 7th, along with an ascending support line. The line has caused five bounces so far, the most recent on December 19. next day.
Despite the bullish candlestick, the daily RSI is bearish. It is declining, below 50, and has not generated any bullish divergence.
Moreover, the Chainlink price is once again approaching the support line. Since the lines get weaker each time they touch, this could mean that a breakdown is on the way. If one occurs, the rate of reduction could be very rapid. However, in case of a reversal, the main resistance area would be at $9.50.
Will the Bullish Divergence Lead to a Relief Rally?
While the readings on the daily time frame are leaning bearish, the six-hour chart shows that upside momentum is expected. This is mainly due to the bullish divergence on the six-hour RSI (green line). Such divergence often precedes an upward move.
As a result, LINK price is likely to rise to the descending resistance line, which has been there since November 8th and is currently at $6. If Chainlink price breaks out of the line, it is likely to continue higher towards the 0.382-0.5 Fibonacci retracement resistance level at $7.06-$7.53.
Conversely, a failure to break out of the line and decline below the $5.67 low would suggest a possible breakdown from the long-term ascending support line.
To conclude, the future direction of Chainlink price movement is unclear. Whether the price breaks the short-term resistance line or gets rejected once again can help determine future trend direction.
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