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A general market downturn continues to hinder cryptocurrency majors like Chainlink (LINK), Ethereum (ETH), and XRP among others from sustaining the uptrend ahead of the year-end. After losing 1.5% in 24 hours and 9% in a fortnight, LINK price is trading at $14.35 on Wednesday.
Although Chainlink price holds below key support areas starting with the seller congestion at $16 and $15, holding tightly onto support highlighted by the 21 Exponential Moving Average (EMA) (in blue) could steady the the uptrend and propel LINK to trigger the potential wedge pattern breakout.
Over the last few weeks, investors have mainly focused on locking in the accrued gains, following a couple of bullish months. Some people could also be selling LINK amid concerns of increasing competition from other Oracle networks, for example, Band Protocol and BandChain.
Investors seem to be worried that Chainlink is at the risk of ceding market share to its competitors.
These concerns and the broader weariness in the market are weighing Chainlink down and delaying the much-anticipated rebound.
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Chainlink Price Prediction: LINK Eyes 10% Move To $16
As established, Chainlink holds above the 20 EMA at $14.33—a support level that must be defended at all costs to prevent declines from diving further. An immediate recovery from this level would also increase the chances of a falling wedge pattern breakout.
Formed by two downward-slopping trendlines connecting a series of lower highs and lower lows, the falling wedge is considered a bullish signal. As the lines converge, the price momentum slows, pointing at a potential trend reversal.
It is recommended to wait for a breakout above the upper trendline which coincides with the 200-day Exponential Moving Average (EMA) (in purple) when making long entries aiming for targets measured from the wedge’s height.
On the contrary, if the price breaks below the lower trendline, shorts can be entered, expecting further decline. Stop-losses would be placed outside the wedge on either side to help traders manage risk.
The Moving Average Convergence Divergence (MACD) indicator supports the projected bullish theory, which means that traders would be more inclined to buy LINK than short the token.
As buying pressure mounts rallies behind Chainlink, the odds would begin to flip in favor of the bulls. Traders would be looking forward to a 10% breakout to $16 and subsequently, LINK could FOMO towards the psychological resistance at $20.
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