Chainlink Surges 6.3% to $7.05 - Breaking Out or Bull Trap?

Over the past 24 hours, Chainlink's LINK token has rallied 6.3% to around $7.05. This surge comes amid a period of bullish momentum for LINK, up 14.7% over the past week. However, with LINK still down massively from all-time highs, traders must determine if this rally is sustainable.

LINK's impressive 6.3% single-day surge stands out, as Bitcoin has traded relatively flat over the same 24-hour period. This divergence indicates traders are rotating out of Bitcoin into altcoins like LINK, searching for higher returns.

Additionally, LINK remains far below its $52.70 record high from May 2021, compared to Bitcoin consolidating near its own all-time high. This suggests LINK could have much further upside potential if the altcoin rally accelerates.

Monitoring the Crucial $7 Resistance Level

The key test for LINK in the near-term will be maintaining the breakout above the round number resistance at $7.

LINK is battling to flip previous resistance at $7 into support. If successful, it could trigger a continued move higher, with $8.50 as the next target. Failure to hold $7 could lead to a fallback towards $6.50.

Bulls want to see LINK establish support above $7 to confirm the short-term uptrend is intact. This would give further confidence the recent altcoin strength has legs.

Given LINK's clear breakout above $7 resistance as Bitcoin trades sideways, I anticipate the rally to continue in the near-term as long as $7 holds as support.

The 50-week moving average around $10 is the next major resistance zone where the bulls could run into trouble. I expect LINK will likely face some sideways churn between $7-$10 in the coming weeks.

But the longer-term technicals remain constructive, and the altcoin trading volume surge suggests further upside once the near-term overbought conditions cool off. Overall, the rally appears to have room to run.

LINK's recent price action and technical breakout suggest now could be an opportune time to gain altcoin exposure for traders bullish on the cryptocurrency space.

However, prudent risk management is essential given LINK's history of volatility. A stop loss below the $7 support would help protect against a bull trap. Patiently layering in on dips may be the most prudent move to benefit from additional upside while mitigating downside risk.

On the upside, the first resistance zone to watch is the 50-week MA near $10. Beyond that, the 2021 highs around $35 would come into focus if the altcoin rally accelerates further.

On the downside, it's crucial for LINK to maintain the recent breakout above $7 to confirm the bullish trend change. Below that the key support to watch is the $6.50 zone and 200-week MA near $5.75.

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