LINK is about to fall 17% due to trade tensions?

The escalating trade tensions have put Chainlink (LINK) in a difficult position. This asset has faced numerous obstacles in regaining its upward momentum over the past week, while the recent negative sentiment among traders has further worsened LINK's outlook.

Trader increases Short LINK

As of July 8th, data from the on-chain analysis tool CoinGlass shows that traders have a pessimistic outlook on the market, with a significant decrease in short positions.

They have used too much leverage at the price levels of $12.99 (support below) and $13.83 (above) — thresholds where trading activity is very strong.

Source: CoinGlassAccording to on-chain data, traders have opened Long positions with a total value of $5.87 million and Short positions with a total value of $8.64 million. Therefore, LINK is currently in a downtrend and seems to be preparing for a correction.

Additionally, the Long/Short ratio of LINK is currently at 0.935. Specifically, 48.32% of traders are betting on Long positions, while the remaining 51.68% are holding Short positions at the time of writing.

Source: CoinGlassThus, in the context of escalating trade tensions, traders maintain a negative outlook and appear cautious when participating in the market.

Chainlink: Important thresholds to watch

Technical analysis shows that LINK is at a critical point.

In the past two weeks, this asset has consolidated within a narrow range and has now reached an important resistance level, formed by a downward trend line.

Source: TradingViewIn the past, every time the price reached the current resistance level, LINK was rejected and turned to decline. This is the fourth time the asset is testing this resistance level.

Potential Price Milestones Ahead for LINK

If market sentiment does not change and the price drops below the threshold of $12.7, LINK could face a potential decline of up to 17%.

On the contrary, if market sentiment improves and breaks through this extended resistance zone, while closing the daily candle above the trend line, it could open up strong upward opportunities.

At the time of writing, LINK is trading below the 200-day exponential moving average (EMA 200) on the daily time frame, indicating that the asset is still in a downtrend.

This trend can only be reversed if the price surpasses both the EMA 200 line and the resistance level of 16 dollars.

Minh Anh