Chainlink price support weakens, LINK at risk of 30% correction

Chainlink price has dropped by more than 40% since November 10th, representing three weeks of intense selling pressure. Bulls are looking for a reprieve, however, as December is just around the corner. Bears, meanwhile, are awaiting support to give way for further downside price action to unfold.

Chainlink price must hold $22 to continue higher

Chainlink price action, like many of the top market cap cryptocurrencies, is at risk of a significant downside move. Chainlink is currently in the weakest trading condition it has been in since June 5th, 2021. All conditions necessary for an Ideal Bearish Ichimoku Breakout are present:

1.       Current close below the Tenkan-Sen.

2.       Current close below the Kijun-Sen.

3.       Current close below the Cloud (Senkou Span A and Senkou Span B).

4.       Chikou Span below the candlesticks and in open space.

5.       Future Senkou Span A below Future Senkou Span B.

Bulls have a difficult road ahead if they want to return to a bull market. The first resistance zone ahead is $25.80, where the daily Tenkan-Sen and 50% Fibonacci retracement exist. Above that resistance level, Chainlink price will face the most potent resistance at the 2021 Volume Point Of Control and Senkou Span B (the strongest Ichimoku level) at $27.50. Rejection at either of these two resistance levels could trigger renewed selling and another test of Chainlink’s final support at $22.

LINK/USDT Daily Ichimoku Chart

Because the Optex Bands oscillator shows Chainlink price at extreme lows, the downside risk may be limited. Additionally, there is regular bullish divergence now between the price chart and the Composite Index. The Relative Strength Index shows that Chainlink is currently below the final oversold level of 40, however, a condition that could transition into a bear market.

Failure to hold $22 as support could trigger a swift sell-off to the $17 value area.