Chainlink Plummets 13%, Potential 45% Drop To $6.80 Looms

The cryptocurrency market is experiencing a major drop, with major coins such as Bitcoin hitting a four-month low, plummeting to as low as $54,000, sending shock waves across the market. Chainlink (LINK) has been particularly affected, dropping 13% to trade at $12. Since June 1, LINK has seen a 30% drop in value, sparking major concern among investors.

Renowned crypto analyst Ali Martinez recently Highlighting This could potentially be a major price correction for Chainlink. He suggests that if LINK breaks through a critical support level, it could face a significant downside. Martinez’s analysis focuses on the classic head and shoulders pattern, a bearish formation that signals a reversal from an uptrend.

The head and shoulders pattern consists of three peaks. The central peak, called the head, sits between two smaller peaks, called the shoulders. In Chainlink’s case, the left shoulder formed in December, the head peaked in March, and the right shoulder ended in June. The neckline, which is a key support line, is drawn just above the $12.70 mark.

Chainlink faces significant support

Martinez emphasized the importance of the $12.70 support level, arguing that if LINK were to break below this threshold, it could trigger a significant downside. He noted that a drop below this level could trigger a 45% price correction, pushing it down to around $6.80, which coincides with the 0.786 Fib retracement level.

Martinez also points out some intermediate Fibonacci levels that could act as potential support points on the decline. These levels are marked at 0.5 ($10.58) and 0.618 ($8.82), which indicate a possible pause or bounce on the decline. However, the primary target remains the 0.786 level, reinforcing the potential severity of the correction.

Currently, Chainlink price is struggling to hold the $12.70 support and is hovering around the $12.89 mark. The margin for error is slim and a decisive move below this support could accelerate selling pressure due to growing bearish sentiment and potential panic among investors.

LINK is trading below the key resistance levels of the 50-day and 100-day Exponential Moving Averages (EMAs). The 50-day EMA is at $13.19 and the 100-day EMA is at $14.85. Recently, LINK broke out of the critical support level at $13.15. A resurgence above this level could regain bullish momentum and push the price to the next resistance level at $22.00.

However, the current position below the moving averages indicates a bearish trend. The MACD is continuously declining in the green histogram, suggesting a strengthening bearish trend. The Relative Strength Index (RSI) is sitting in the oversold territory at 28, suggesting a possible bounce.

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