Chainlink (LINK) has created a double bottom pattern close to its May 12 lows, but its inability to initiate a bounce has nearly invalidated the pattern.
LINK has been falling since reaching an all-time high price of $53 in May 2021. The downward movement has so far led to a low of $5.30 this month. This amounted to a drop of 89% measuring from the all-time high.
Prior to the breakdown, the line had been in place for 952 days. A breakdown from such a long-term structure often suggests that a new trend has begun. If the downward movement continues, there is strong support at $4.20. This is both the 0.5 Fib retracement support level and coincides with the 2020 highs.
Ongoing bounce
Cryptocurrency trader @Rekt_Tekashi tweeted a chart of LINK which shows a small pump.
There are several mixed signals in the daily time frame.
On the bullish side, the price has created a double bottom pattern and a bullish candlestick on June 14. The double bottom is considered a bullish pattern.
On the bearish side, the bullish divergence trendline (green line) in the RSI has been broken and validated as resistance (red icon).
Since the entirety of the bullish candlestick from yesterday has been retraced, it seems that the daily time frame is leaning bearish.
Wave count analysis
The movement since May 12 looks like a completed A-B-C structure. As a result, the ongoing trend is still downwards.
The 1.27 external Fib retracement of this move falls at $4.40. This is also very close to the previously outlined long-term support.
If it fails to hold, the next support would be all the way down at $3.
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