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Chainlink (LINK) Giving Mixed Signals Despite Price Rebound

2 mins
7 January 2022, 05:22 GMT+0000
Updated by Kyle Baird
7 January 2022, 05:22 GMT+0000
In Brief
  • Chainlink is trading above long-term support at $19.20.
  • It's trading inside a short-term ascending parallel channel.
  • Technical indicators are mixed.
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Chainlink (LINK) is trading above a crucial horizontal level. Whether it breaks down from here or continues to bounce back could determine the direction of the longer-term trend.

On Dec 4, LINK bounced after reaching a low of $15. The bounce was crucial since it created a higher low relative to the price in July. 

Furthermore, it validated the $19.20 area as support. 

This is a crucial area because LINK has been trading above it since the beginning of 2021, with the exception of the deviation (red circle) in July. 

Therefore, a breakdown below this support could mean that it’s mired in a longer-term correction.

Current pattern

Lower time frames provide a mixed reading. 

Technical indicators in the daily time frame are mostly bullish since both the MACD and RSI are increasing. The latter is above 50, which is often considered a sign of bullish trends, while the former is nearly positive.

Furthermore, LINK has broken out from a descending resistance line and reclaimed the $23 horizontal area after.

The four-hour chart, on the other hand, shows that LINK has been trading inside an ascending parallel channel since its Dec 4 lows. This type of channel is normally considered a corrective pattern, meaning that an eventual breakdown from it would be expected. 

Currently, LINK is trading just above the midline of this channel (green circle). A decrease below the midline would confirm that the trend is bearish and mean that an eventual breakdown is likely.

Cryptocurrency trader @Altstreetbet tweeted a LINK chart, stating that it’s likely completed a corrective phase and will now target higher resistance levels.

The movement since Sept 6 (highlighted) resembles a completed A-B-C corrective structure. This is especially likely because of the overlap between the current high and Sept 21 lows (red line). If true, LINK could increase toward the $40 level.

However, in order for this possibility to remain valid, LINK has to stay above its Dec 4 lows (white line) of $15. 

Due to the bearish readings from lower time frames, this possibility is now becoming less likely.

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In line with the Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate, unbiased reporting, but market conditions are subject to change without notice. Always conduct your own research and consult with a professional before making any financial decisions.