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Amid today’s market correction, Chainlink (LINK) has lost its recent gains, falling back to a crucial support level. An analyst suggests a monthly close above its current range could position the cryptocurrency for a 35% surge.
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Chainlink Retest Crucial Price Zone
Chainlink has retraced 9.1% in the past 24 hours to retest the key $14 support zone again. The cryptocurrency surged 15.7% from last Friday’s lows to hit an 18-day high of $16 on Wednesday, momentarily recovering 35% from this month’s low.
However, the recent market correction halted the momentum of most cryptocurrencies, with Bitcoin (BTC) falling back to the $83,700 mark and Ethereum (ETH) dipping to the $1,860 support zone.
Today, LINK dropped from $15 to $14.07, losing all its Wednesday gains. Previously, analyst Ali Martinez noted that the cryptocurrency has been in an ascending parallel channel since July 2023.
Chainlink has hovered between the pattern’s upper and lower boundary for the last year and a half, surging to the channel’s upper trendline every time it retested the lower zone before dropping back.
Amid its recent price performance, the cryptocurrency is retesting the channel’s lower boundary, suggesting a bounce to the upper range could come if it holds its current price levels.
Meanwhile, Rekt Capital highlighted that the token is testing its multi-month symmetrical triangle pattern, which could determine the cryptocurrency’s next move.
As the analyst explained, Chainlink consolidated inside a “Macro Triangular market structure” for most of 2024 before breaking out of the pattern during the November market rally.
During the Q4 2024 breakout, the cryptocurrency hit a two-year high of $30.9 but failed to hold this level in the following weeks. As a result, it has been in a downtrend for the past three months, with LINK’s price falling back into the Macro Triangle.
“The main goal for LINK here is to retest the top of the pattern to secure a successful post-breakout retest,” Rekt Capital detailed, adding, “It’s possible this is a volatile post-breakout retest.”
LINK Needs To Hold This Level
Rekt Capital pointed out that, historically, Chainlink has had downside deviations into this price range: “Back in mid-2021, LINK produced a downside deviation into this price area in the form of multiple Monthly downside wicks.”
Nonetheless, the cryptocurrency is downside deviating “but in the form of actual candle-bodies closes rather than downside wicks” this time.
The analyst also highlighted that, like in 2021, LINK is trading within a historical demand area, at around $13-5 and $15.5, testing this zone as support. Based on this, the cryptocurrency must successfully hold this area to “position itself for upside going forward.”
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Moreover, the retest is key for reclaiming the top of its triangular market structure. Breaking and recovering that level would “exact a successful post-breakout retest” and enable the price to target the $19 resistance in the future.
The analyst concluded that if LINK closes the month above the triangle top, it “would position price for a successful retest, despite the downside deviation.”
As of this writing, Chainlink trades at $14.09, a 6.9% drop in the monthly timeframe.
Featured Image from Unsplash.com, Chart from TradingView.com
