- An analyst predicted that LINK would dip lower before it can rise above $8 again.
- A retest of $7.06 could drive LINK upwards if bulls take control around $6.79.
- The OBV and ADX indicated that LINK might plunge as low as $6.20 before any reasonable hike.
Michaël van de Poppe, analyst and founder of MN Trading told his 663,200 Twitter followers that Chainlink‘s (LINK) trajectory may remain unchanged. According to Poppe, LINK was facing heavy resistance a little above $8.
The analyst opined that the token, whose fundamentals are based on Oracle solutions and potential use cases within decentralized applications, could continue hovering around a higher low.
For context, a higher low occurs when the price of a cryptocurrency reaches a new low higher than the previous low without being intercepted by a lower low. In most cases, this price movement indicates an entry signal before a bullish run, and Poppe did not fail to highlight the potential.
Before his latest tweet, Poppe has been shilling LINK to his community, describing the token as undervalued on several occasions. However, recent price movements have raised questions about the token’s ability to break through a significant crucial barrier above $8.
At the time of writing, the LINK/USD 4-hour chart had formed a bearish structure. As Poppe said, the token had also created a lower low and plunged below $7. But LINK may not succumb to another 10% decline if bulls consider $6.79 as an entry zone.
If demand appears, a retest of the $7.06 could drive LINK in the upward direction. But indications from the On-Balance-Volume (OBV) showed that LINK could still face selling pressure.
A Sharp Nosedive Could Be Imminent
This was because LINK closed lower than its low on August 15. Therefore, there could be a bearish divergence that drives another sharp red candle. However, if the price plummets to $6 or $6.20, bulls can take over the market, and from LINK’s historical performance, it could be the entry that creates a sustained rally.
At the same time, the upward potential depends on bulls’ resolve either to defend the $6 or leave it to bears. Another indicator to consider is the Directional Movement Index (DMI).
At the time of writing, the +DMI (green) was 7.26 while the -DMI (red) was a lot higher at 35.21. Thus, the large difference in the directional indices implies that sellers were in control. Also, this is considered a sell/weak signal.
Furthermore, the Average Directional Index (ADX) was 42.06. Such a high value of the ADX (yellow) suggests a strong directional movement for the downside.
As it stands, LINK has the potential to fall below $6.20 due to the presence of selling pressure. However, the $6.20 also provides an entry opportunity for traders looking for short-term gains.
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