Chainlink on the cusp of a massive rebound after dumping over 10% in a matter of hours

Chainlink is leading the correction in the decentralized finance (DeFi) ecosystem after losing over 10% of its value since Tuesday. The token is trading at $11.7 amid an ongoing retreat. Recovery is possible if LINK confirms the likelihood of a double-bottom pattern forming on the 4-hour chart.

Meanwhile, the Relative Strength Index adds credibility to the short term bearish momentum following the dip into the oversold area. A rebound will come will into play if the RSI creates a bullish divergence. This type of divergence forms when the RSI hits a low within the oversold area followed by a series of higher lows.

The occurrence of a double-bottom pattern also hints at a tentative recovery from the dip. The pattern comes into the picture when an asset tests the same lower price level twice without breaking it. The price level comes up as a firm buyer congestion zone, thus the weight behind the anticipated rebound.

LINK/USD 4-hour chart

On the upside, resistance is anticipated at $13 (former support). Other levels likely to hinder recovery include the 200 Simple Moving Average, the 50 SMA, and the $100 SMA. The rebound from the double-bottom targets $15, a move that could pull Chainlink into a new bullish phase towards the yearly high at $20.

It is worth noting that, LINK will invalidate the uptrend if declines stretched past the expected support at $11 (double-bottom). Massive losses are likely to play out as investors rush to cash out before Chainlink dives under $10. A possibility exists for the price to refresh August’s support at $7.2.

Chainlink intraday levels

Spot rate: $11.8

Relative change: -0.3

Percentage change: -2

Trend: bearish

Volatility: High