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LINK’s Breakdown Suggests Long-Term Bullish Trend Might Have Ended

2 mins
Updated by Ryan Smith
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In Brief

  • LINK has broken down from a parallel ascending channel.
  • There is short-term support at $8.90 and long-term support at $5.
  • LINK is possibly in wave C of an A-B-C corrective structure.
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The Chainlink (LINK) price has been falling since breaking down from a parallel channel on Dec. 17.

The long-term bullish trend may have ended, and LINK will continue declining towards the support area at $5.

Long-Term Trend

LINK has been increasing mostly throughout its price history, beginning in 2017. In Jul. 2019, it reached a high of $4.90 before declining, followed by another unsuccessful breakout attempt in Feb. 2020.

LINK finally broke out successfully in July and continued rallying at an accelerated rate until it reached a high of $20.71 in Aug. However, it has been moving downwards since.

Technical indicators have turned bearish. The MACD is losing strength, the RSI has just crossed below 50, and the Stochastic Oscillator has made a bearish cross.

long-term Movement
Chart By TradingView

If LINK continues falling, the closest long-term support area is at $5.

Channel Breakdown

The daily chart shows that LINK had been trading inside a parallel ascending channel since after reaching a low of $7.28 on Sept. 23. It broke down from the channel on Dec.8 and validated it as resistance afterward on Dec. 17 (shown with the red arrow).

Since then, it has been moving downwards at an accelerated pace. On Dec. 23, LINK reached a low of $8.03 but subsequently rallied, leaving a lower wick with a magnitude of 26.66%. This caused it to remain above the minor $8.90 support area.

Similar to the weekly time-frame, technical indicators are bearish, supporting the continuation of a downward move.

Channel
Chart By TradingView

LINK’s Wave Count

Cryptocurrency trader @TheEWguy outlined a LINK chart, stating that the trend is bullish. He expects new highs towards $27 and eventually $36.

LINK Wave Count
Source: Twitter

Since the tweet, LINK has instead broken down and invalidated the bullish scenario.

Therefore, the remaining possibility is that LINK is in a bearish A-B-C corrective structure (shown in orange below), which should end near $5.

While the target found by making the A:C wave ratio 1:1 is at $4. the fact that the long-term support area is at $5 suggests that it could act as the bottom.

The sub-wave count is given in black.

LINK Wave Count
LINK Chart By TradingView

Conclusion

To conclude, while short-term relief could occur, LINK should continue moving downwards towards the support area at $8.90, and possibly $5.

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Disclaimer: Cryptocurrency trading carries a high level of risk and may not be suitable for all investors. The views expressed in this article do not reflect those of BeInCrypto.

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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)
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