Chainlink hits a critical floor — Is smart money set for a breakout?

**Key Takeaways**

Chainlink’s (LINK) sharp decline below the key $16 support zone reveals stress on a major supply area, placing approximately 53.87 million accumulated tokens under pressure. This breakdown shifted market psychology as buyers, who previously expected a continuation, now face a rejection at this critical level. Despite the bearish sentiment and expanding downside momentum, shrinking exchange reserves combined with an Elliott A-B-C rebound suggest that recovery potential remains alive.

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### Market Structure Insight: What Does LINK’s Breakdown Below $16 Reveal?

The loss of the $16 support zone is significant because it marks a strong earlier buying area that now acts as resistance. Although this breakdown weighs on sentiment, LINK continues to trade near a dense cluster of activity, which has become a crucial rebound zone for short-term holders patiently awaiting recovery signals.

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### Shrinking Exchange Reserves Hint at Bullish Pressure

Exchange reserves for Chainlink have continued their downward trend, with a recent 2.26% decline pushing the reserves toward 1.8 billion LINK tokens. This persistent reduction supports the narrative of ongoing accumulation rather than distribution. Holders withdrawing LINK from exchanges signals confidence despite the correction and reduces sell-side liquidity. Consequently, when buyers return, the price could experience sharper upside moves.

Though the $16 breakdown presents short-term psychological challenges, the consistent decline in exchange reserves builds a constructive backdrop for a potential recovery by limiting supply pressure and often preceding price stabilization.

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### Rebound Forms Within Chainlink’s Descending Channel

Since early September, Chainlink has been trading inside a well-defined descending channel that outlines its corrective price structure. Currently, LINK hovers near the channel’s lower boundary, where buyers triggered a rebound following the completion of an Elliott A-B-C correction.

The reaction at the “C” leg suggests the market still respects this lower channel support. However, for a meaningful sentiment shift, LINK must break above the channel’s midpoint, targeting $16.64—a past supply zone. Clearing this hurdle opens the door toward $19.13 as the next resistance level, with a broader projection toward $23.64 if momentum strengthens further.

Conversely, rejection at the mid-channel region would weaken the bullish setup and increase the risk of deeper declines.

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### Chainlink Taker Buy Dominance Accelerates

The Futures Taker Buy Cumulative Volume Delta (CVD) remains firmly controlled by buyers, indicating strong participation from aggressive market players during the correction phase. This steady inflow of taker buys reflects genuine conviction rather than passive positioning.

Notably, the rising CVD aligns with the rebound from the “C” wave on the chart, adding credibility to the early reversal attempt. This positive momentum also coincides with the decline in exchange reserves, which commonly signals accumulation phases.

However, the futures market’s strength still requires spot market confirmation for LINK to sustain upward momentum. Nonetheless, the current CVD pattern supports the developing bullish narrative.

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### Top Traders on Binance Show Strong Long Bias

Binance’s top-trader positioning data reveals that 74.32% of accounts hold long positions compared to 25.68% short, resulting in a ratio of 2.89—a clear indicator of strong conviction among experienced traders.

This long bias reinforces the broader accumulation thesis and aligns with the Taker Buy CVD trend. Historically, top traders tend to increase long exposure during late-stage corrections, further supporting the rebound from channel support.

While LINK still needs to break above $16.64 to confirm a clear trend shift, this positioning suggests that strategic traders are leaning toward recovery rather than continued decline.

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### Conclusion

Chainlink is showing early signs of stabilization as exchange outflows rise, Taker Buy CVD strengthens, and top traders increase their long exposure. Combined with the Elliott rebound and descending channel support, the technical backdrop looks constructive.

However, for momentum to be confirmed, LINK must reclaim the $16.64 level. If buyers maintain buying pressure beyond this point, the path toward the $19.13 target remains realistic.

The next few trading sessions will be critical in determining whether accumulation outweighs lingering bearish sentiment and ushers in a sustained recovery.
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