Chainlink price witnessed a sell-off after setting up a local top at $23.31.
The resulting downswing is likely to knock LINK down to $19.03, providing bargain hunters with an opportunity to accumulate.
A breakdown of the range low at $17.23 will invalidate the bullish thesis.
Chainlink price is preparing for a move lower as its bullish momentum begins to wane. This downtrend, albeit bearish in the short term, will provide investors with an opportunity to accumulate LINK at a discount. It will also allow them to position themselves for a quick run-up to set higher highs.
Chainlink price rose 35% between December 6 and December 8 to set a swing high at $23.31. This run-up faced exhaustion at the end of the upswing, resulting in a sideways movement that is currently breaking lower.
So far, LINK has dropped 5.3% and from the looks of it, more is yet to come. The 50% retracement level at $20.27 is the first support level that the oracle token will encounter. But, market participants can expect Chainlink price to bounce off the 70.5% retracement level at $19.03.
A reversal here is likely to propel LINK to tackle the range high at $23.31. Clearing this hurdle will open the path for Chainlink price to take on the next resistance barrier at $25.62. This run-up from $19.03 to $25.62 would constitute a 35% ascent.
Although a continuation of the rally beyond $25.62 is likely for Chainlink price, investors need to exercise caution beyond this point., especially considering the choppy nature of the cryptocurrency market.
LINK/USDT 4-hour chart
Regardless of the bullish outlook, if Chainlink price fails to hold above the 79% retracement level at $18.51, there is a high chance the oracle token will retest the range low at $17.23.
If LINK produces a lower low below this barrier, it will invalidate the bullish thesis.