Chainlink’s price has increased by nearly 30% in just five days and is trading near $17.
The RSI above the 70.0 threshold suggests that LINK is overbought in this rally.
The MVRV ratio also suggests possible profit-taking by LINK holders.
Chainlink (LINK) stock price broke out of consolidation and hit a new monthly high in less than a week.
However, this could cause LINK holders to sell their holdings before they lose the opportunity to reap the gains.
Chainlink investors may profit
Chainlink’s price is $16.8 after rising nearly 30% over the past week. However, this has led to altcoins reaching saturation, which is historically synonymous with corrections.
This is evident in the relative strength index (RSI). The RSI is a momentum oscillator that measures the speed and change of price movements. It ranges from 0 to 100, with readings above 70 indicating overbought conditions and below 30 indicating oversold conditions.
Currently, the RSI is above 70, indicating that LINK is overbought on the 12-hour chart. This happened in February, after which the rally took a break. The same may be true for Chainlink’s price.
Chainlink Relative Strength Index (RSI). Source: TradingView
Furthermore, it could face additional discomfort from investors if it starts selling, a likely outcome. This is because the market value to realized value (MVRV) signals profit-taking.
The MVRV ratio tracks investors’ gains/losses. Chainlink’s 30-day MVRV is 16%, indicating profitability that could prompt a sell-off. Historically, LINK tends to correct at 10%-20% MVRV levels, marking it as a risky zone.
Chainlink MVRV ratio. Source: Santiment
This is the case with Chainlink; investors may be moving to secure their gains, which is indicative of a retracement.
LINK Price Prediction: A return to $15 is possible
Chainlink’s price is $16.8 and it has broken through multiple resistance levels to break above the $16.5 resistance level. Close to $17.0, the altcoin has seen a significant rally. However, this impetus that has taken LINK to monthly highs may also result in a decline.
If the above turns out to be true, the price of Chainlink could fall back to $15.0. This would happen once the $15.6 support is broken, which could extend the decline to $14.4.
Chainlink price analysis. Source: TradingView
However, if investors do not act to sell and the rally continues, Chainlink’s price could continue to rise. A breakout above $17.5 would invalidate the bearish thesis, pushing LINK towards $18.
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