Rally LINK is questionable despite …

Rally LINK is questionable despite …

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Contents

Rally LINK in question despite 40 +% intraday gain
CONTENT

  • LINK rate bounced off 200-day MA.

  • LINK made a bullish breakout of the falling wedge.

  • Price has probably completed wave A of the A-B-C correction.

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ChainLink (LINK) price rose 41% on September 24. The price has broken the bullish pattern, but its movement looks more like a correction rather than the beginning of a new growth phase.

The LINK cryptocurrency rate reached a high of $ 20.71 on August 17 and has since been declining along the downward resistance line. As a result of this large-scale drawdown, the price marked at least $ 7.28 on September 23. As a result, the pair formed support in the $ 7.50 area.

This area is also strengthened by the 200-day moving average (MA). As soon as the market reached the $ 7.50 area, a bullish engulfing candle appeared on the chart, and the price soared to $ 10.40 within one day. The scale of the increase from minimum to maximum was 41%.

We are currently witnessing an attempt to develop a rebound above the minor resistance in the $ 10.40 area and a downward resistance line built from the highs.

LINK chart. Source: TradingView

A bit earlier, cryptocurrency trader @PostyXBT shared a LINK chart on Twitter, warning that the price was approaching support provided by the 200-day MA. As we can see, upon reaching this level, the pair actually made a very aggressive rebound..

Rally LINK is questionable despite ...

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Rally LINK is questionable despite ...

Source: Twitter

U-turn or respite?

On the 6-hour chart at the time of writing the analysis, the price made a bullish breakout of the downward resistance line. This breakout was preceded by strong bullish divergence signals on the RSI and MACD, which makes this rally significant.

LINK chart. Source: TradingView

However, the bullish trend has not yet been confirmed on the daily chart. The RSI remains below the 50 mark and the Stochastic Oscillator has not formed a bullish crossover. MACD indicator just started to rise.

We will not be able to argue that the trend of the pair is bullish until we see a bullish breakout of the longer term downtrend resistance line or a bullish crossover of the Stochastic Oscillator..

LINK chart. Source: TradingView

Wave analysis

Since the aforementioned August 17 high, LINK has formed a five-wave bearish structure (black in the chart below). The overlap of waves 1 and 4, coupled with the wedge-shaped shape, gives us reason to assume the presence of an initial diagonal.

In addition, trading volumes declined during wave 5 bottoming, and increased during a bullish breakout, which is typical of such moves..

LINK chart. Source: TradingView

The longer-term chart shows the likelihood that the entire bearish move was wave A (orange) of the longer-term correction A-B-C.

If this assumption is correct, then the price may rise to the Fib level of 0.618 at $ 15.26, after which it will resume the decline.

LINK chart. Source: TradingView

Thus, the LINK rate may rise in the short / medium term, however, it is more likely that the pair is still in a phase of a longer-term correction..

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