LINK Price Forecast: Chainlink bulls need to face music as rally ends

Chainlink (LINK) price is entering a crucial moment for its rally that started at the beginning of the year. In the first two weeks of 2023, only some light second-tier data came out and hardly any headwinds were present to challenge the rally. That is changing this week as the Bank of Japan was the first central bank to kick off 2023 and immediately halted the overall rally in cryptocurrencies. This was soon followed by very choppy trading on comments from European Central Bank and Federal Reserve members.

Chainlink price looks questionable for more upside

Chainlink price had a gruesome trading day as plenty of bulls will have lost quite a lot of money in Wednesday trading. The biggest reason for this sudden change in sentiment comes with the Bank of Japan providing a surprisingly unchanged monetary policy, while markets were certain that a policy change was imminent.

To make matters worse, traders got flunked for their assessment of the ECB as the French member Villeroy pushed back on the idea that the central bank would only hike interest rates by 25 basis points in February and then halt. The central bank official gave an opposite view of 50 basis points hikes continuing until at least the summer. If you ask me, the Goldilocks scenario looks almost dead and gone.

LINK, for now, has the monthly pivot still supporting near $6.25, as it did on Wednesday and the week before on Friday, January 13. The bearishness comes with the third rejection against the 200-day Simple Moving Average (SMA) and the 55-day SMA, which was tuned into support on Monday, January 16., and now could be acting as resistance again. Bulls are losing control, and once the monthly pivot breaks price action could tank toward $5.70 soon in an unwinding of the rally.

LINK/USD daily chart

Upside potential for now would only come from the biggest central bank in the world: the US Federal Reserve. Should the Fed continue to build up expectations of smaller 25 basis point hikes in February and the months to come, the Goldilocks scenario for a soft landing would build more support. Although trading would remain choppy, buying the dips would see LINK break above $7.00 and possibly trade toward $8.50 by mid-February.