Chainlink's LINK Jumps 14% to $7.94 - Bullish Momentum or Dead Cat Bounce?

Chainlink's LINK token has seen a significant 14% price surge over the last 24 hours to trade at $7.94. This strong upside move comes after a period of consolidation for LINK around the $7 level.

LINK saw high trading volumes of $1.45 billion in the past day, indicating substantial interest amongst traders. Over the past week, LINK has gained 10% as bullish momentum returned. Moreover, LINK remains up a sizable 49% in the past month even after declines in June.

However, LINK is still down extensively from its all-time high near $50 set last year. It faces uphill battle to regain its former highs.

With today's surge higher, LINK broke out above resistance around $7.50 and its 20-day moving average. The next resistance level sits at psychological $8.

On the downside, LINK has support at $7.50 and the 20-day MA. Below that, the 50-day MA near $7 will be key support to watch. Losing the 50-day MA could signal a bullish rejection.

While LINK's pump today is no doubt positive, caution is warranted on whether it can sustain these gains in the short-term. The broader macro environment remains challenging.

I expect LINK may face selling pressure near $8 resistance, leading to a pullback toward the breakout level around $7.50. For the upside to continue, LINK needs to keep making fundamental progress and boosting developer activity.

The 14% pump could entice bottom-fishers to open long positions in hopes of further upside. However, prudent traders may wait for a pullback to enter.

Buying into significant one-day rallies carries substantial risk of a bull trap. A higher-probability play could be waiting for support to be confirmed on a pullback before going long. LINK remains in a long-term uptrend, but volatility is expected.

While unlikely in the immediate short-term given macro headwinds, LINK does have long-term potential to eventually regain its former all-time highs - and potentially move higher - if adoption continues rising.

For that to happen, Chainlink needs to keep expanding integration of its oracle services across DeFi, NFTs, gaming, metaverses and more. Increased utility for LINK is essential to fueling a larger bull run. Execution risks remain, but the upside for LINK as "crypto's gold standard oracle" is substantial if adoption keeps growing.

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