Chainlink was nearing an important demand zone at $15.5. The profit-taking activity has not halted, but the metrics showed that this selling threat should reduce. Will this be enough to halt the retracement from $19.5?
Chainlink [LINK] prices have fallen 17.2% since the 28th of July. This retracement came alongside a Bitcoin [BTC] price drop of 4.9% from $119.8k to $113.6k.
However, on-chain and technical signals suggest the worst of the retracement may be over — but a bounce isn’t guaranteed just yet.
The data from Santiment showed that the wave of profit-taking on LINK might be at an end.
The Dormant Circulation saw a sizeable spike on the 1st of August. It signaled increased on-chain token movement, and generally is a result of heightened selling activity.
It came alongside a 5.08% price drop for the day.
Meanwhile, the Mean Coin Age (90-day) — which had been trending higher — has steadily declined over the past two weeks. This drop aligns with the view of broader network distribution.
Another key metric, the MVRV ratio, also dropped with the Chainlink price, showing that holders were sitting on less profits than before.
The token movements highlighted earlier pointed to steady profit-taking in recent weeks. The threat from profit-taking activity to the price might be at an end as the MVRV approaches zero.
The strongest argument for a Chainlink trend reversal was the price action of the past month.
Admittedly, the market structure was firmly bearish, and the RSI has fallen below neutral 50, at press time. The OBV was receding, and the evidence at hand showed bears were dominant.
If Chainlink had a bullish reaction, it would likely come from the $15.5 demand zone. It had been an important zone in the second week of July, where prices consolidated briefly before racing higher.
It also has confluence from the 50-day moving average. The Fixed Range Volume Profile from the beginning of July showed that the Value Area Low (dotted blue) was at $15.7.
Traders can keep an eye on Bitcoin too, to give clues for a LINK trend reversal.
