LINK traders waiting for lower prices to take off again could have an ideal opportunity. This is because the price of Chainlink just showed a big bearish pattern that could go down even more.
LINK price action has formed a head and shoulders pattern suggesting that the price may be headed for an even lower direction. The original cryptocurrency Chainlink formed its first peak in the first few days of December. The head marked the top of the middle of the month, and the right shoulder formed this week.
LINK initially started the week bullish, but turned around midweek. Its price of $21.97 at press time was a 15.21% discount from its weekly high.
The head and shoulders pattern is traditionally considered a bearish sign. This means that LINK could potentially extend the decline from the press time price list.
The main target prices of sprockets
Current feelings and projections for 2025 are optimistic. If so, then LINK could be on the verge of another big rally. Any short-term pullback that may occur between then and there could therefore be an opportunity to buy at a deeper discount.
But how low can LINK fall before it hits the next lower range or rally zone? The next potential support range is between $18.60 and $19.80. However, some analysts believe the price could fall as low as $14.
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The forecast suggests that LINK will experience enough selling pressure on the price to push below the recent swing low to move to the high Fibonacci range. Looking at this indicator alone, the next level of support could be expected around the $18 price zone.
LINK price is likely to test the above price levels if it maintains selling pressure for some time. His spot flows were higher in the last 4 weeks than they were in the last 12 months.
Outflows in December were particularly more dominant than inflows. This confirmed a strong wave of pressure, mainly due to profit taking after the impressive rally since November.
Prompt outflows were in line with exchange flows. LINK had approximately 1.02 million coins flowing out of exchanges at last count. Meanwhile, foreign exchange inflows were significantly lower at 713,820 coins.
Exchange flows confirmed that the original Chainlink coin had net negative flows, causing it to lose liquidity.
Meanwhile, LINK funding rates decreased significantly in December compared to November. Funding rates were mostly positive during this time. However, negative funding rates dominated the last 2 days indicating a change in trader sentiment.
The transition from positive to negative funding rates is consistent with expectations of larger shortfalls. Positive funding rates are historically associated with a preference for long stocks, while negative funding rates favor bears.
Remember that these bearish expectations do not guarantee that the outcome will align in that direction. The emergence of strong demand is still a significant possibility.
Such an outcome would reduce the potential downside of the cryptocurrency. However, the heads and shoulders pattern comes after an impressive rally, so profit taking is bound to be high.
In addition, the overall level of excitement in the market is declining. The combination of these factors makes a strong case for the bears.
