Chainlink has entered price discovery and traders should watch several key levels for the next possible top.
Chainlink (LINK) remains to be one of the best performing cryptocurrencies in the past twelve months. As of Jan. 23, LINK is now bigger than Litecoin (LTC) and now number seven at $9.2 billion market capitalization, after surpassing Bitcoin Cash earlier this week.
The LINK price surge also coincided with rumors this week that Grayscale is preparing to add a Chainlink Trust product. This news event likely played a part in the price of Chainlink rallying toward new all-time highs, making LINK, once again, one of the best performing cryptocurrencies.
What is the key support level?
The daily chart for Chainlink shows massive volatility in recent months, but also some beautiful price action.
Every previous level of resistance flipped for support, after which the price continued climbing almost in textbook fashion. That’s the beautiful nature of price action and trading in general.
Most people have the impulse to enter a position when the price is soaring. But those support/resistance flips actually give the best entries. Specifically, the first support/resistance flip occurred at the $10 level, after which the same happened with the $13 and $17.30 areas.
Therefore, the crucial level to watch for potentially more downside is the $17.30 area, as well as the $19.50 zone. This latter area is the previous all-time high in 2020 and possibly the point of the next support/resistance flip, which would be bullish for more upside.
Possible Chainlink price tops to watch
As Chainlink is in price discovery, it becomes difficult to define the potential top structures’ next points of interest. The Fibonacci extension tool, however, is quite useful for traders to determine these areas.
Using this indicator, the first zone is between $29-31, which aligns with both of the Fibonacci extensions. The second zone is at the 2.618 Fibonacci extension of $39 and the last one is found at the $42 area.
However, the next impulse wave will likely see a big surge in the Bitcoin (BTC) pair of LINK. The recent run was spearheaded by Bitcoin, while the altcoin-BTC pairs were relatively flat.
Once Bitcoin finishes its correction and starts to move upward in a slow manner, the likelihood of altcoins outperforming Bitcoin increases.
LINK/BTC meets big resistance zone
The altcoin-BTC pairs have been waking up from their deep slumber in the past weeks, but it can’t really be called an “altseason” just yet. Altcoins must still consolidate and build up strength for the next leg up.
For Chainlink, such an accumulation is shown on the left side of the chart. Chainlink’s price has been acting in an accumulation range for some time before the latest surge started to happen.
For such a big surge to occur, Bitcoin’s price must remain steady. Otherwise, the volatility in BTC will have an even bigger impact on the less-liquid altcoins.
LINK/BTC now faces crucial resistance. If this level at 0.00074000 sats can’t break to the upside, renewed tests at the 0.00055000 and 0.00041000 sats levels are possible.
However, if Chainlink breaks through 0.00074000 sats, continuation is likely toward the next significant zone at 0.00110000 sats. In the USD pair, such a surge would put Chainlink close to the next Fibonacci zone at $39.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.