LINK Bounces Strongly After Market-Wide Crash

2 mins
7 September 2020, 15:43 GMT+0000
Updated by Ryan Smith
7 September 2020, 15:46 GMT+0000
In Brief
  • LINK is trading between support and resistance at $10 and $13.8.
  • Daily technical indicators are bullish.
  • The price has possibly completed an A-B-C correction
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The ChainLink (LINK) price has been increasing since a strong bounce on September 5.
A breakout above one of the resistance levels outlined below could mean that the price has begun a new upward trend and will head towards a new all-time high.

Range Trading

The LINK price has been falling since reaching a high of $20.71 on August 17. Since then, the price has created one lower high, so it’s possible to outline a descending resistance line, even though it has not been touched sufficient times in order to confirm its slope. The fall continued until LINK reached a low of $9.10 on September 5. After doing so, the price immediately bounced, creating a bullish engulfing candlestick the next day. At the time of writing, the price was trading between support and resistance at $10 and $13.8, respectively. The latter is also the 0.5 Fib level of the entire decline, further confirming the area as resistance Technical indicators are turning bullish. The MACD is in the process of giving a bullish reversal signal, and the stochastic RSI has just made a bullish cross. However, there is no bullish divergence yet. If the price flips the $13.80 resistance area and breaks out from the descending resistance line, it would confirm that it’s heading higher.
LINK Descending Resistance
LINK Chart By TradingView

Short-Term Movement

Cryptocurrency trader @Dentoshi93 stated that she closed a long trade for LINK but is looking to long a re-test of the $10 area. The entry also fits with our support area, so a re-test could create a double bottom and offer potential buying opportunities.
LINK Movement
Source: Twitter
However, the short-term charts show that the price may not give an opportunity to enter at $10. After generating considerable bullish divergence, the price initiated an upward move that is still ongoing. At the time of writing, it was trading very close to the $12.20 minor resistance area and a short-term descending resistance line. A breakout above both would likely take the price towards $13.8, and afterward at the longer-term descending resistance line near $15.
LINK Short-Term Breakout
LINK Chart By TradingView

LINK Wave Count

Beginning from the previous high on August 27, the LINK price seems to have completed an A-B-C correction (shown in black below), in which the C wave is 1.21 times longer than the A one. In addition, we can outline five sub-waves (blue) in both the A and the C waves, making this a very likely formation.
LINK Long-Term Movement
LINK Chart By TradingView
The short-term movement is interesting. Since the September low, the price looks to have begun a bullish impulsive move, which is noticeable due to the lack of overlap between new highs (blue line). If so, we would expect the price to make a lower high and then continue moving upward. On the other hand, a fall below the September 5 low of $9.1 would invalidate the bullish scenario.
LINK Short-Term Count
LINK Chart By TradingView
To conclude, it’s possible that the LINK price has completed its correction and will move towards new highs. A breakout above the long-term descending resistance line near $15 would confirm this possibility.


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