Chainlink Moves Past $8 Resistance on a 20% Spike — Can LINK Break Out of $9.20 Range?
Can Chainlink move out of its key range? | Credit: Shutterstock
- Fundamentals are driving the price increase
- Further upside is expected with the next target of $9.2 in the near term.
- A higher low is needed to anticipate a sustainable uptrend.
With the recent rollout of Chainlinks Cross-Chain Interoperability Protocol (CCIP) functionally the price of LINK has risen by 20% in the last 24 hours. This long-awaited upgrade will further enable the DeFi sector, to transfer data and liquidity seamlessly across the sector.
Chainlink is tied closely with the DeFi ecosystem and its price changes have tied to this sector in the past. Now, it has managed to surpass the $8 mark, but can it surpass a more important $9.20 level that defines the horizontal range in which it has been trading since May of 2022?
The price of LINK has been trading sideways since its July 13 spike, making another interaction with the $7.30 level on the 18th that resulted in a pullback. But today, June 21, we have seen strong bullish momentum with the price spiking but 20% and finally breaking the $8 mark – a mark last seen in mid-April.
Now that the price has established a new high, it is showing some signs of consolidation, but we are still to see a breakout above its significant horizontal resistance zone, which could signal the start of a bull cycle for this cryptocurrency.
Price Analysis
On the daily chart below, we can see that the price of LINK has been trading in a horizontal range from May 10, 2022, when it first fell to $5.5. In June same year, it recovered to $9.20 and has since interacted with these levels numerous times, establishing this range further as significant support/resistance.
On June 10, 2023, the price fell to $4.81 for the first time since the range formed, which is the lowest point the price has been since the start of the correction. As it entered the liquidity zone below, it could have activated buying orders that have now caused the price to pick up momentum again.
June 21’s breakout, even though still short of a higher high compared to the mid-April 2023, was a significant one because the price surpassed a descending resistance level from August 14, 2022. The overall structure hasn’t been broken; however, this could be interpreted as an early sign that the price rise currently seen is going to lead to a breakout above $9.20
Why the Sudden Increase in Interest?
Chainlink has been a promising blockchain since back in 2017, but there hasn’t been much to show for it since that time. Its first glow-up was in the midst of the DeFi sector expansion and hype surrounding trustless lending, which made its peak in May 2021.
As an oracle, Chainlink was viewed as the cornerstone platform enabling DeFi to fetch real-world data and bridge the gap between protocols and traditional assets that these protocols utilize to produce value for its investors.
The price of LINK was strongly correlated with the DeFi sector TVL and rose with the interest in that arena. Conversely, the price descended with the DeFi hype and Chainlink fell into the background, outshined by NFTs.
So why the sudden interest, and could it be enough to propel the price of LINK further?
Numerous fundamental factors have caused this increase in interest. But one is standing out as the most important one. That is the company’s Cross-Chain Interoperability Protocol (CCIP) which was made available earlier this week .
“Chainlink’s Cross-Chain Interoperability Protocol (CCIP) is a new generalized cross-chain communication protocol that provides smart contract developers with the ability to transfer data and tokens across blockchain networks in a trust-minimized manner.”
This functionality further enables DeFi and increases its composability, connecting seemingly isolated chains together and merging their liquidity.
Whales have taken into account this functionality and taken action on this news, buying up a total of 788,877 LINK at the price of $7.62 per token which resulted in a 6.5% increase.
Price Prediction for LINK
It appears that there is still more room for growth for the price of LINK in the near term. We have seen the development of a five-wave impulse from June 10, out of which June 21’s spike was its ending wave. But, by looking at the sub-wave we are still to see an interaction with the $9.20 level as its lower-degree wave 5.
The price might get rejected at the most significant resistance level, and most likely, it will. But that might not be a bad thing, as the price needs to establish the first significantly higher low for a breakout to be more valid.
In this projected scenario, an ABC correction would be its 2nd sub-wave of the higher-degree count, potentially retracing the price to $6.4 and would make a bullish setup more plausible.
if the price manages to break the $9.20 level it could be attributed to an over-reaction and it would still be uncertain whether or not it can result in a sustainable uptrend.
Conclusion
Even though the fundamentals have caused whales to buy up the token and drive this price rise, the overall neutral structure hasn’t been broken. The price is still trading in its significant horizontal range between $5.40 and $9.20 whose upper level is likely going to be interacted with on the current rise.
We might see a breakout above $9.20 but that might not be a favorable course, as it would be uncertain where the next target is and how much bulls would have in store to continue pushing the price higher.
If we have seen the start of a bullish cycle for the price of LINK then this rise is part of its first sub-wave from June 10, and the length of the wave isn’t as important to call out the starting bull cycle as is the structure. This is why on the presumed wave 2 we need to see a higher low developing to around $6.50 area before further uptrend continuation.
Disclaimer
Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.
