Chainlink’s intense upwards momentum showed some signs of faltering earlier this week when the cryptocurrency declined from weekly highs of nearly $4.00 to lows of $3.55 in a sharp downwards movement that jarred investors.
In the time since visiting these lows, buyers have been able to firmly establish the mid-$3.00 as a strong support level, boosting it higher each time it taps this region.
It is important to note, however, that this price action has led LINK to decline beneath a key ascending trendline that was previously guiding its upwards momentum.
The break below this level has opened the gates for significantly further downside, leading some analysts to predict that it could see losses totaling at 70% or more in the days ahead.
Analyst Believes Chainlink Could be Forming a “Bear Trap”
At the time of writing, Chainlink is trading up just over 2% at its current price of $3.77, marking a notable upswing from daily lows of $3.55 that were set overnight.
The decline to these lows erased virtually all of the gains that the crypto posted during last week’s uptrend, working to tip the scales into the favor of sellers.
LINK’s strong support in the mid-$3.00 region did prove to be enough to stop it from seeing any further downside, however, and has even led one analyst to believe that this latest drop could be a “bear trap.”
“LINK I think this move is a bear trap and we’ll see price close back above the orange midpoint from here and move back up,” the analyst explained while referencing the chart seen below.
He further added that while looking towards its BTC trading pair, a failure for it to confirm this possibility could open the gates for a decline down towards 0.00038 BTC – a notable decline from its current price of 0.00043 BTC.
“If I’m wrong, price should be revisiting the 38K region next,” he said in reference to the previous comment.
LINK’s Break Beneath a Key Ascending Trendline Opens the Gates for Serious Losses
One technical development that could lead Chainlink to see some notable losses in the days and weeks ahead is the fact that it has now navigated below a trendline that was previously boosting its price action.
This occurrence has led one popular analyst – who has a track record of accurately forecasting major declines seen by other altcoins – to note that LINK is now poised to decline over 70% to $1.00.
He pointed to this downside target in a chart he recently offered, pointing towards the break below the ascending trendline that was formed in the time following its capitulatory decline in mid-March.
Featured image from Unplash.