Chainlink (LINK) Tests Key Support Amid Declining Momentum: Will $8.08 Be Revisited?

• Chainlink (LINK) saw a 19% surge after hitting a ten-month low but has recently faced increased selling pressure, causing a 5% decline.

• Technical indicators like the Chaikin Money Flow (CMF) and On-Balance-Volume (OBV) suggest a growing bearish sentiment.

Chainlink (LINK) has recently experienced a notable price movement, seeing a 19% surge since hitting a ten-month low on August 5. This uptrend formed an ascending channel, a pattern that typically signals bullish momentum. 

Over the past few days, the market has been experiencing some selling pressure, and this has affected LINK as it has lost 5% of its value since Monday. As of the latest data, LINK is trading at $11.26, with a daily trading volume of $232,482,272, reflecting a 3% decrease over the past 24 hours. 

Technical Indicators Reveal Growing Bearish Pressure

The current technical analysis shows that the market may remain bearish in the short term. The Chaikin Money Flow (CMF) is an oscillator that measures buying and selling pressure, and the CMF crosses the midpoint. This movement indicates that the demand for LINK is deteriorating, as seen in the chart below. CMF value close to or even below zero usually suggests that the downtrend in trading activity is winning over the uptrend, which can result in further losses.

Moreover, the On-Balance-Volume (OBV) indicator, which measures buying and selling pressure, has also been declining since the price decline. The OBV has dropped by 1% and is at 885 million, showing that selling pressure has increased. This further indicates that the sellers are in charge of the market, as reflected by the decreasing OBV. 

The price-DAA divergence, an on-chain indicator that measures price action against daily active addresses, is currently at -61. 2%. This is somewhat bearish for the market and suggests that LINK’s price is not being backed up by its network usage. This divergence is a concerning signal for the bulls, indicating that the recent price action may not be sustainable without a corresponding increase in user activity.

Analyst Identifies Critical Support Level for LINK

As previously reported by CNF, Crypto analyst Rekt Capital has highlighted the importance of the $8.19 level for Chainlink. This level, which is near the upper boundary of the previous accumulation area, has now been defined as a new support level. The successful test of this support has indicated the start of what seems to be a new upward trend for LINK. Given that LINK has bounced from this critical support level, it is now trading above a crucial demand zone. 

Crypto analyst CRYPTOWZRD has noted that the daily technical outlook for LINK is strongly bullish, which shows a strong buy signal on the daily chart and suggests further growth. LINK has emerged from a downward trend that has prevailed in the market since the middle of July. A green candle on the daily chart suggests a reversal with the prices recovering from the $9. 50 support level.

This support level has recently been tested and has proven vital in the current upward movement. Historical data also shows that LINK has another major support level at $7. 30, which strengthens the concept of these levels in LINK’s price action.