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Significant Correction in the Works for Oracle Projects Chainlink and Band

Decentralized oracles tokens LINK and BAND have surged more than 25% in the past week, but their uptrends may soon reach exhaustion.

Significant Correction in the Works for Oracle Projects Chainlink and Band
Shutterstock cover by Stefano Garau

Key Takeaways

  • Chainlink is up 27% since Oct. 8 after breaking out of a descending parallel channel.
  • Meanwhile, Band Protocol skyrocketed more than 50% within the same period.
  • Despite the considerable upward pressure, the TD sequential index forecasts that both of these cryptocurrencies are bound for a steep correction.

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More than $40 billion have flooded the cryptocurrency market in the past week, allowing Chainlink and Band Protocol to post massive gains. Now, it seems like these oracle tokens have reached exhaustion, indicating losses on the horizon.

Chainlink Correction Incoming

Chainlink entered a significant corrective period after reaching an all-time high of $20.3 in mid-August.

As prices made a series of lower lows and lower highs during the 64% retracement, a descending parallel channel formed within the 12-hour chart. This technical pattern was able to contain LINK’s price action for nearly two consecutive months.

Nonetheless, a spike in the buying pressure behind the decentralized oracles token on Oct. 8 was significant enough to push it outside of the channel. The breakout was followed by a 27% jump that saw prices rise to a high of $11.8.

While LINK may have more gas in the tank to advance towards $13 based on the descending parallel channel, other technical indexes forecast a retracement before higher highs.

Chainlink US dollar price chart
LINK/USD on TradingView

The TD sequential indicator recently presented a sell signal at a key resistance barrier on LINK’s 12-hour chart. The bearish formation developed in the form of a green nine candlestick after prices got rejected by the 100-twelve-hour moving average.

Now, a further spike in sell orders behind the decentralized oracles token might see prices retrace to the 200 or 50-day moving average.

These areas of support are currently hovering around $10.7 and $9.8, respectively.

Chainlink US dollar price chart
LINK/USD on TradingView

When looking at IntoTheBlock’s “In/Out of the Money Around Price” (IOMAP) model, the short-term pessimistic thesis holds. Based on this on-chain metric, the most significant level of support underneath Chainlink lies between $10.3 and $10.7.

Here, roughly 8,000 addresses had previously purchased more than 30 million LINK.

Such a massive supply wall might have the strength to keep falling prices at bay. Holders within this price range would likely do anything to avoid seeing their investments go into the red. They may even buy more tokens to absorb some of the selling pressure and push prices higher.

In/Out of the Money Around Price by IntoTheBlock
In/Out of the Money Around Price by IntoTheBlock

Under such circumstances, bouncing off the $10.7 support level would leave Chainlink open to a bullish impulse towards $13.

The IOMAP cohorts show no significant resistance in-between these price points other than the 100-day moving average. Therefore, by turning this trend following indicator into support, the odds for further advancement will drastically increase.

Band Protocol Signals Substantial Correction

Like Chainlink, Brand Protocol has enjoyed an impressive rally over the past week.

Since Oct. 7, this cryptocurrency surged more than 50%, rising from a low of $5 to recently hit a high of $7.5. Now, several metrics indicate that the recent uptrend is approaching exhaustion.

The TD sequential index presented a sell signal in the form of a green nine candlestick on BAND’s 1-day chart. The bearish pattern forecasts a one to four daily candlesticks correction before the uptrend resumes.

A spike in the selling pressure behind this altcoin will help validate the pessimistic outlook, pushing prices down to the setup trendline that sits at $5.6.

Band Protocol US dollar price chart
BAND/USD on TradingView

A downswing to the setup trendline will help form the right shoulder of a head-and-shoulders pattern that appears to be developing within the same time frame. This technical formation estimates that upon forming the right shoulder, an increase in demand for BAND could lead to a full-blown trend reversal from bearish to bullish.

Slicing through the $7.3 resistance level, also known as the neckline, could signal a massive breakout after prices retrace. The head-and-shoulders pattern forecasts that a 32% upswing will occur after breaking through resistance, which may take the cross-chain data oracles token to $9.7.

This target is determined by measuring the distance between the head and the neckline and adding it to the breakout point.

Band Protocol US dollar price chart
BAND/USD on TradingView

It is worth noting that IntoTheBlock’s IOMAP reveals that the $6.3 level is the most important barrier underneath Band Protocol.

Here, more than 250 addresses are holding over 3 million BAND.

This significant area of interest will likely serve as stiff support, but breaking through it will validate the thesis previously explained.

The Crypto Market Moves Forward

While governments and central banks worldwide continue to clamp down on cryptocurrencies, several publicly-traded companies have decided to enter the space.

The $10 billion Stone Ridge Asset Management recently revealed more than $100 million invested in Bitcoin. The announcement comes after Square Inc. purchased approximately 4,709 BTC through an over-the-counter platform.

Even though there is a bumpy road ahead of Chainlink and Band Protocol, the fact that more than 15 public companies are now said to be holding cryptocurrencies on their balance sheets is a positive long-term signal for the entire industry.

Given the rising interest in the space, a potential retracement may be the catalyst that pushes these altcoins to higher highs.

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