Chainlink price prints a small rally as the dust settles on the Fed decision
- Chainlink price rallies over 3% in the European session as the dust settles after the Fed rate decision.
- LINK price might be printing profit, there is a systemic risk that more dollar strength will come in.
- Short-term traders will jump on this short-term buy opportunity, while medium-term traders will look to short yet again.
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Chainlink (LINK) price perfectly reflects the current situation with some short-term upward potential as the dust settles after the sell-off on Wednesday, on the back of the FOMC. On the one hand, market expectations are getting so elevated that a rate decision that falls in line gets published with the currency selling off, which was the case for the Swiss franc this morning. In these fast-moving markets, there are opportunities for bulls to jump on some intraday rallies, as more medium-term traders focus on the message of Powell that more rate hikes will come and that the Fed will act without hesitation to bring inflation down, regardless of its recessionary impact.
LINK price sees traders evaluating Powell’s message
Chainlink price has some more room for upside in the short-term as several currencies sell-off with both Norway and Switzerland issuing rate hikes in line with analysts, triggering sell-offs in both currencies. Meanwhile, the BoJ has intervened in markets and triggered a sell-off in USD/JPY and EUR/JPY, strengthening the yen. In doing so, cryptocurrencies are getting pulled upwards in the spillover effect and LINK price is currently printing 3% of profits, with a possible $7.50 price target for today or tomorrow.
LINK price in the medium-term, however, remains a sell as these interventions only have a very short-term effect and could see a quick unwinding of the current levels back to Wednesday or Tuesday. This means that Chainlink price could rally up to $7.50 at which level it is likely to receive a firm rejection from the monthly pivot and the 55-day Simple Moving Average capping to the topside. A pullback would result in a tumble to $6.50 and possibly even lower towards $5.50, with price action underpinned by the monthly S1 and the low of May.
LINK/USD Daily chart
More risk to the downside could come as bears will use those short-term rallies to build up further short positions against LINK and go long the dollar. At a certain point, a tipping point will have been reached, and a short sell-off could be triggered with price action shooting through $5.26. A double band at $5.02 will be waiting to catch the falling knife, but that is no insurance against LINK falling to $4.50.
Author
Filip Lagaart
FXStreet
Filip Lagaart is a former sales/trader with over 15 years of financial markets expertise under its belt.
