Chainlink price up 10% but risks indicate possible pullback

Chainlink (CRYPTO:LINK) has recently experienced a 10% price increase, trailing only behind Polygon (CRYPTO:MATIC) in gains among major cryptocurrencies.

Despite this rise, several factors suggest a potential pullback for LINK.

The latest data from CryptoQuant shows that Chainlink’s exchange reserves have surged to their highest level since August 4.

This increase in reserves typically signals potential selling pressure, as more tokens are returning to exchanges.

Generally, long-term holders remove their tokens from exchanges, which helps support price growth.

The recent uptick in reserves indicates that more tokens are being prepared for sale, which could hinder LINK's uptrend.

Additionally, Santiment’s social dominance data reveals a significant spike in mentions of Chainlink.

This increase suggests that the cryptocurrency has captured broader market attention, which could indicate a local price peak.

High social dominance often correlates with increased Fear of Missing Out (FOMO) among traders, leading to rushed buying and potential price corrections.

On the technical side, Chainlink’s daily chart displays a bearish pennant formation.

This pattern, which includes a flagpole and converging trendlines representing resistance and support, often indicates a potential pause in the current uptrend.

If this bearish pennant pattern is confirmed, LINK’s price could drop below $10, with $9.95 as a likely target.

However, if buying pressure persists and the bearish pattern is invalidated, LINK could break out and target resistance levels around $13.10.

A successful breakout would shift market sentiment and potentially drive further buying activity, maintaining the uptrend.

At the time of reporting, the Chainlink price was $11.50.