The Chainlink (LINK) price surged to a high of $17.32 on December 8 but has since declined. It’s now nearing critical short-term support levels, prompting speculation on whether it will rebound or experience a breakdown.
After breaking a long-term horizontal resistance level in October, LINK’s rapid rise led to a yearly peak last week. However, this week, the altcoin’s movement has been bearish, forming a potentially bearish engulfing candlestick, a rare occurrence since the uptrend began.
Assessing market momentum using the Relative Strength Index (RSI), traders gauge asset overbuying or overselling. Despite RSI currently above 50, it’s declining and has recently dropped below 70, signaling weakening momentum.
Technical analysts applying Elliott Wave theory foresee LINK potentially in the fourth wave of a five-wave upward movement since June. A likely target for the corrective wave’s low is $12.75, supported by the 0.382 Fib retracement and a short-term ascending channel’s trend line, marking a 12% decline from the current price.
While this suggests a short-term bearish outlook, a breakout from this channel could indicate the beginning of the fifth wave, potentially propelling LINK to $27, a 90% increase from current levels.