Filecoin Price Analysis: FIL responds positively to Chainlink's integration

Filecoin price is springing from a double bottom formation today on the announcement of Filecoin and Chainlink’s integration plans. The buying pressure could lift FIL to the all-time at $97.00 very quickly. 

Chainlink opens up bi-directional communication capability for Filecoin

LINK is known as the decentralized finance (DeFi) oracle service, and its integration with FIL creates the opportunity to connect with Ethereum and other smart contract enabled blockchains. Developers will have access to Web 3.0 infrastructure due to Chainlink oracles off-chain computation along with FIL decentralized storage capabilities. Moreover, the integration should automate FIL storage functionality and will permit FIL’s state availability on other blockchains. 

Daniel Kochis, the Head of Chainlink Business Development, summarizes the solutions:

“Chainlink’s extensive network...provides users with a highly reliable and fully-featured set of decentralized oracle services for automating functions that rely on some combination of Filecoin’s storage capabilities and the execution of externally connected applications.”

Initial use cases include Filecoin Miner Insurance, DataDAOs, Data Bounties, DeFi Data, and Automated Storage. 

Filecoin coin price to pause due to extreme overbought condition

From February 23 to March 17, Filecoin price advanced over 200% on heavy volume as the DeFi wave of enthusiasm reached peak levels. The subsequent 25% correction, modest compared to other cryptocurrencies, shaped a double bottom formation on average to below-average volume on the 12-hour chart before breaking out today.

An obstacle for the new rally is the slightly overbought condition shown on the Relative Strength Index (RSI). Traders may need to be patient as FIL pauses at the all-time high. Otherwise, the technical outlook is tilted bullish.

After overcoming the all-time high, Filecoin price should advance to the 1.618 Fibonacci extension level at $111.73. Depending on how the volume profile takes shape, FIL could reach the topside trendline extending from the February 9 high through the March 17 high, which sits at $118.50.

FIL/USD 12-hour chart

If the FIL breakout fails to hold, there is immediate support just below the correction low at the 0.382 Fibonacci retracement level at $72.00. Significant support unfolds at $64.30, the intersection of the 0.50 retracement level and the topside trendline extending from the December 10, 2020 high through the February 9 high.

An acceleration in selling could take Filecoin price down to the intersection of the 0.618 Fibonacci retracement level and the 50 12-hour simple moving average (SMA), representing a 40% move from the all-time high.