Chainlink (LINK) has formed a double bottom pattern near its May 12 low, but its inability to initiate a bounce has almost invalidated the pattern.
LINK has been falling since hitting an all-time high of $53 in May 2021. The downside movement so far has reached this month’s low of $5.30. This equates to a drop of 89% from the all-time high.
Before the breakdown, the line was in place for 952 days. Breaking from such a long-term structure often shows that a new trend has begun. If the decline continues, there is a strong support at $4.20. This is both a 0.5 Fibonacci retracement support level and coincides with the 2020 high.
cryptocurrency trader @Rekt_Tekashi Tweeted a chart of the link showing a small pump.
There are many mixed signals on the daily time frame.
On the bullish side, the price has formed a double bottom pattern and a bullish candlestick on June 14. The double bottom is considered a bullish pattern.
On the bearish side, the RSI has broken out of the Bullish Divergence Trendline (green line) and validated as resistance (red icon).
As the entirety of the bullish candlestick since yesterday retraced, it looks like the daily time frame is turning bearish.
wave count analysis
Since May 12 the movement looks like a complete ABC structure. As a result, the ongoing trend is still to the downside.
The 1.27 external Fibonacci retracement level of the move declined at $4.40. This is very close to the long-term support already mentioned.
If it fails to hold, the next support will lie all the way down to $3.
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