We have a new coin that although looking very bullish longer term, still has a lot of work to do to become mainstream.
Chainlink has fallen ever so slightly during the trading session on Thursday, but it has recovered its losses to form a small dragonfly doji. This is the same thing as a hammer, but it is not as pronounced. Either way, it does suggest that there are buyers underneath willing to jump in and pick up a little bit of Chainlink at these extraordinarily low levels. The $14 level looks to be offering support, so with this being the case I think we are going to continue to try to build some type of basing pattern here in order to attempt a bounce.
That being said, the market breaking down below the $14 level could have LINK dropping precipitously. Recently, we have seen a lot of noisy behavior in crypto overall, and of course with Bitcoin breaking down, the rest of the smaller markets get hammered. Unfortunately, it really does not matter what Chainlink does as far as an ecosystem is concerned, as long as the Bitcoin markets continue to struggle.
The Federal Reserve is tightening its monetary policy, and that has had traders out there looking to get away from anything significantly risky, which of course LINK certainly is. We have a new coin that although looking very bullish longer term, still has a lot of work to do to become mainstream. If we can break above the $18.15 level, then I think that the market will turn around and go much higher. This could open up the possibility of a move towards the 50 day EMA, which currently sits at the $21.30 level. The 50 day EMA has also been sloping lower for quite some time, so that of course does suggest that we are going to remain in a downtrend, especially as we had formed the “death cross” recently as the 50 day EMA has broken below the 200 day EMA.
Looking at this chart, I do think that the best thing you can see is a bit of sideways action in the short term in order to build up a little bit of confidence. If Bitcoin can take out the $41,000 level to the upside, that also could have people looking towards other markets such as Chainlink and other smaller coins. That being said, if Bitcoin breaks down significantly, we could see Chainlink truly fall apart.
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