Chainlink Price Analysis: Failing at crucial support could see a drop to $8

After reaching an all-time high of $19.20 on August 16, Chainlink dropped to a low of $7.60 on September 23. Since then, the decentralized oracle has been trending in an ascending wedge formation and is currently trading for $10.60. This ascending wedge is a bearish pattern that starts wide and tapers as it goes up.

LINK/USD daily chart

The 50-day SMA ($10.55) is currently the most significant support level for the decentralized oracle. As per the IOMAP, 7,750 addresses had previously purchased 31.6 million LINK tokens. A drop below the 50-day SMA will see LINK fall to the 200-day SMA ($8).

LINK IOMAP

Adding further credences to the bearish outlook is the fact that the whales seem to be dumping their holdings. The number of addresses holding 100,000-1 million LINK tokens dropped from 256 on September 24 to 240 on October 30. Plus, the number of whales holding 1 million to 10 million tokens is constantly drifting between 51 and 50 since October 17.

LINK holders distribution

Can the bulls flip the narrative?

To change this narrative, the buyers can hope to bounce back up from the 50-day SMA and reach the upper limit of the rising wedge ($13.45). The IOMAP shows a lack of strong resistance levels upfront. There is are moderate resistance barriers at $12 and the 100-day SMA ($11.65), but it shouldn’t be much of an issue.

Key price levels to watch

LINK bears will need to break below the 50-day SMA ($10.55) and drop to the 200-day SMA ($8).

On the other hand, the buyers will want to bounce up from the 50-day SMA and reach the upper level of the wedge formation ($13.45).