6 October Chainlink Price Analysis: A Closer Look at Market Sentiment Using Key Trading Indicator

Crypto News– Since April, Chainlink (LINK) has been tracing a descending resistance trendline, a significant factor influencing its price movements.

6 October Chainlink Price Analysis: A Closer Look at Market Sentiment Using Key Trading Indicator

Over this period, the Relative Strength Index (RSI) has played a pivotal role in reflecting Chainlink’s price volatility. On a daily timeframe, the technical analysis reveals substantial price swings for LINK since April.

During this period, there were notable declines of 46% and 33% (highlighted in red), as well as impressive surges of 77% and 46%, respectively. Throughout this time frame, LINK consistently encountered resistance from a descending trendline, leading to two distinct rejections on July 20 and September 30 (marked with red icons).

The first rejection triggered a 33% downturn, while the second resulted in a relatively minor retracement. Following its dip to a low of $7.20, LINK formed a bullish engulfing candlestick pattern featuring a long lower wick (indicated by the green icon). This type of candlestick suggests a strong reversal, erasing the losses sustained in the previous period.

Chainlink Price Forecast for October: Anticipating Market SwingsTop of Form

The daily RSI on the time frame can serve as a valuable tool for assessing future trends, a favored metric in the toolkit of traders to measure momentum and guide their decisions when buying or selling assets.

Typically, when the RSI reading is above 50, and the trend is upward, it gives the bulls an advantage, whereas a reading below 50 suggests the opposite.

Examining the Chainlink price chart, it becomes apparent that both the 46% and 33% price declines coincided with the daily RSI entering the overbought territory (highlighted with a red circle).

In line with this observation, on September 30, the RSI once again ventured into overbought territory, corresponding with the resistance trendline rejection (indicated by the red icon). Subsequently, this development resulted in an 8% price drop.