LINK, the native cryptocurrency of the decentralized oracle network Chainlink, fell over 5% during Friday’s U.S. market hours. Along with a broader market pullback, the LINK price encountered overhead supply due to multiple resistances blocking its path to a sustainable breakout. Is today’s sell-off a signal for a major correction or an opportunity for buyers to counterattack?
Overhead Supply May Push Chainlink Price to $10
By press time, the Chainlink price trades at the $13.08 mark, with an intraday sell-off of 4.3%. In the daily chart, this downtick is placed at the resistance trendline of a channel pattern that has been carrying a sustained correction since mid-December 2024.
Amid the pattern formation, the LINK price showed a series of lower highs and lower lows, indicating an established downtrend. A bearish sequence between the daily exponential moving average (20 > 50 > 100 > 200) accentuates the bearish sentiment in the market.
Currently, the coin price forms an evening star candle at the downsloping trendline, which is a known signal for an upcoming reversal.
According to the history of this pattern, a bearish reversal within it has typically led to a correction of around 40-42%. Thus, if the Chainlink price breaks below the immediate support of $12.7, the selling pressure could intensify and drive a correction to $10.
On the contrary, if buyers manage to breach the overhead trendline, the selling pressure will get invalidated.
On-Chain Metrics Suggest Weak Buy-Side Defense
A deeper analysis of Chainlink’s on-chain data accentuates that the path of least resistance is downward. According to Sentora’s In/Out of the Money, the LINK price has weak support levels on the buyers’ side and substantial supply pressure from the upside, as displayed by the relative size of the colored sphere below.
The series of narrow green spheres, from the $13 to $11 price band, shows a lesser volume to defend the support level. Inversely, the large sphere suggests a significant concentration of holders sitting at breakeven, many of whom may look to exit positions once the price revisits this level.
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