See More

LINK Increases by More Than 40% in a Day: Relief Rally or New Upward Move?

2 mins
Updated by Dani Polo
Join our Trading Community on Telegram

In Brief

  • LINK has bounced at its 200-day moving average.
  • LINK has broken out from a descending wedge.
  • The price has likely completed the A wave of an A-B-C correction
  • promo

The ChainLink (LINK) price increased by 41% on Sept. 24. While the price has broken out from a bullish pattern, the current movement is still more likely to be a correction than the beginning of a new upward movement.

LINK Bounces at Support

The LINK price has been decreasing alongside a descending resistance line since it reached a high of $20.71 on Aug. 17. The decrease has been significant and continued until the price reached a low of $7.28 on Sept. 23. This movement validated the $7.50 area as support. The $7.50 area is also strengthened by the presence of the 200-day moving average (MA). Once the price reached this area, it created a bullish engulfing candlestick, increasing all the way to $10.40 in a single day. The increase from low to high measured 41%. Currently, the price is attempting to move above the minor $10.40 resistance area and possibly the descending resistance line drawn from the highs.
LINK Movement
LINK Chart By TradingView
Cryptocurrency trader @PostyXBT tweeted out a LINK chart, stating that the price is approaching the 200-day moving average (MA) support. As seen in the chart above, the price initiated a very strong bounce once it reached the MA.
LINK Movement
Source: Twitter

Reversal or Relief?

The six-hour chart shows that the price has broken out from a descending resistance line. The breakout was preceded by considerable bullish divergence in the RSI & MACD, increasing its validity.
LINK 6-hour Time-frame
LINK Chart By TradingView
However, the daily chart does not confirm that the trend is bullish. The RSI is below 50, and the Stochastic Oscillator has not made a bullish cross. The MACD has just begun to increase, having created one higher momentum bar. Until the price breaks out from the longer-term resistance line or a bullish cross transpires in the Stochastic Oscillator, we cannot state that the trend is bullish.
LINK Failed Reversal
LINK Chart By TradingView

Wave Count

Since the aforementioned Aug. 17 high, the LINK price has completed a five-wave bearish formation (shown in black below). Since waves 1 & 4 overlap, it is likely that the movement was a leading diagonal, also supported by the wedge-like shape. Furthermore, volume decreased during the wave-5 bottom and picked up during the breakout, customary in such movements.
LINK Wave Count Diagonal
LINK Chart By TradingView
In the longer-term, it is possible that this entire decrease has been the A wave (orange) of a longer-term A-B-C correction. If so, the price could increase all the way to the 0.618 Fib level at $15.26 before resuming its downward movement.
LINK A-B-C
LINK Chart By TradingView
To conclude, while the LINK price is expected to increase in the short/medium-term, it is more likely that the price is still engulfed in a longer-term correction.
Top crypto platforms in the US | March 2024
Coinbase Coinbase Explore →
AlgosOne AlgosOne Explore →
Chain GPT Chain GPT Explore →
iTrustCapital iTrustCapital Explore →

Trusted

Disclaimer

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. Please note that our Terms and ConditionsPrivacy Policy, and Disclaimers have been updated.

Valdrin-Tahiri.jpg
Valdrin Tahiri
Valdrin discovered cryptocurrencies while he was getting his MSc in Financial Markets from the Barcelona School of Economics. Shortly after graduating, he began writing for several different cryptocurrency related websites as a freelancer before eventually taking on the role of BeInCrypto's Senior Analyst. (I do not have a discord and will not contact you first there. Beware of scammers)
READ FULL BIO
Sponsored
Sponsored