Chainlink has expressed some signs of overt weakness throughout the past few hours, with its price reeling down towards its bedrock support at $14.00.
This sharp downturn has come about as the entire crypto market shows some signs of weakness, which may be, in part, rooted in Ethereum’s plunge towards $400.
ETH’s price action has had growing influence over that of most altcoins in recent weeks, even swaying that seen by Bitcoin on occasion.
Because ETH plunged from overnight highs of $420 to lows of $400, this appears to have created a headwind that has pulled LINK and other altcoins lower.
Analysts are now noting that Chainlink may be poised to see further weakness in the near-term, with multiple technical signals suggesting that downside is imminent.
This weakness comes shortly after the crypto broke below the lower boundary of a bull flag that it had been forming – a sign of underlying weakness amongst its buyers.
Chainlink Shows Signs of Technical Weakness as Buying Pressure Evaporates
At the time of writing, Chainlink is trading down 12% at its current price of $14.13. This is around the recent support level that was established during its recent “rug pull” decline from highs of $20.00.
The cryptocurrency had previously been flashing signs of strength, with buyers posting a potent reaction to this support level that helped send it back up towards $17.00. On-chain data regarding the crypto’s active address count also pointed to strength amongst bulls.
This strength proved to be fleeting, however, as the slight downturn seen by the entire market today sent it plunging lower.
One analyst is now noting that it appears to be poised to see an even deeper pullback due to mounting technical weakness.
“LINK on the other hand… Looking a little weak. Falling under some of our more useful moving averages and below weekly VWAP. This one is probably ready for a decent pullback,” he explained.
Image Courtesy of Cantering Clark. Chart via TradingView.
LINK Breaks Below Bullish Technical Formation as Bulls Lose Edge Over Bears
Before today’s sharp decline, Chainlink had been forming a classic bull-favoring technical pattern.
This “bull flag” was developed in the time following LINK’s drop from its recent highs of $20.00 and ended up resolving in bears’ favor.
Another respected analyst spoke about this pattern in a recent tweet, stating in jest that “we sent it the wrong way” while showing the ongoing technical breakdown in a chart.
Image Courtesy of Teddy. Chart via TradingView.
If Chainlink breaks below the crucial support level at $14.00, this ongoing correction may cut significantly deeper.
Featured image from Unsplash. Charts from TradingView.