The token that powers the decentralized oracle network Chainlink represents a potential buying opportunity for investors looking to profit from current market weakness. However, buying LINK at its current low is risky, as there is no guarantee that its price won’t fall further.
As the technical setup data shows, the bears are looking to push LINK price to new lows.
Chainlink Bears Hold Firm
Over the past month, LINK has maintained a downward trend. At press time, the token, which was priced at $10.24, has fallen 12% in the past 30 days. This drop in value has provided an opportunity for traders looking to “buy the dip.”
This is based on an assessment of the altcoin’s market value to realized value (MVRV) ratios using 30-day and 90-day moving averages. Data from Santiment shows that LINK’s 30-day and 90-day MVRV ratios are -4.84% and -17.66%, respectively.
Historically, when an asset’s MVRV is below zero, it is considered undervalued. This means that the asset’s current price is below the average price of all of its tokens in circulation. Many view this as a buying opportunity because they believe they can buy the asset at a low price, hold it, and then sell it at a high price for a profit.
However, for traders looking to buy the LINK dip, the path to profitability may not be so easy. The bearish sentiment surrounding the altcoin is intensifying, and its price may experience further declines.
Since closing at a monthly high of $12.35 on August 24, LINK has been in a descending triangle trend, a bearish pattern that reflects a price decline. As selling pressure gained momentum, it pushed the token’s price below the lower trendline of the triangle, which formed support at $10.25.
Read more: How to Buy Chainlink (LINK) and Everything You Need to Know
When the price of an asset falls below a support level, it means that selling activity is outweighing buying activity, indicating a potential continuation of the downtrend.
LINK Price Forecast: Retest Failure Could Lead to 21% Price Drop
The LINK Moving Average Convergence Divergence (MACD) indicator’s assessment confirms the likelihood of this downtrend in the short term.
The MACD LINK line (blue) crossed its signal line (orange) on September 1, indicating a change in trend from bullish to bearish. This indicator tracks price trends and the direction of an asset.
With this setup, it indicates that the downtrend is getting stronger. Traders see this as an opportunity to exit longs and take short positions.
Read More: Chainlink (LINK) Price Prediction 2024/2025/2030
If the selling pressure intensifies further, LINK’s attempt to retest its breakout level will fail, and its current downtrend will continue unchecked. If this happens, the token’s price will fall to $8.08, the last low it saw during the overall market downturn on August 5.
However, if the altcoin sees renewed demand and successfully retests its breakout level, it will break through support and attempt to break above its resistance level. A successful breakout above resistance will see LINK trading at $13.73.
