Chainlink (LINK) Price Bounces – Can It Break out of This Long-Term Pattern?

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  • Chainlink faces a make-or-break moment, as technical signals suggest a potential price upswing while whale accumulation adds intrigue.
  • Recent breakdowns from key patterns and support zones raise uncertainty about Chainlink’s immediate price direction.

Renowned cryptocurrency analyst Ali Martinez, known for his insights into the digital asset market, has highlighted technical indicators that could reinforce the prevailing bullish sentiment surrounding Chainlink’s LINK. Specifically, the TD Sequential, a widely-tracked trading indicator, has issued a buy signal on the 12-hour chart. 

This signal aligns with LINK’s current positioning along the lower boundary of a parallel trading channel, indicating the potential for a price rebound to levels of $15.2 or even $17.3 if the buy signal is validated.

Rising Wedge Pattern Breakdown Raises Concerns

However, recent developments have injected uncertainty into Chainlink’s trajectory. Crypto expert Rekt Capital reported a breakdown from the Rising Wedge pattern. LINK is now teetering on the precipice of a breakdown from a critical demand area marked in red. Should the daily close fall below this level, it would mark the initiation of the breakdown process.

Rekt Capital outlines a potential scenario where rejection from current levels could transform the red box bottom into a new resistance zone, presenting further challenges for Chainlink’s price action. The technical analysis underscores the importance of Chainlink reclaiming the bottom of the red box as support to avert further downside.

It’s worth noting that the breakdown has not only been confirmed on the daily timeframe but also on the weekly chart. The weekly closure below the red box indicates a potential shift in momentum, with the red zone possibly evolving into a formidable resistance on the weekly timeframe as well. This development underscores the significance of these critical technical levels LINK is currently navigating.

Whales in Action: Accumulation and Withdrawals

Chainlink’s price movements are also influenced by significant on-chain activity involving whales. Fresh wallets, potentially under the control of a single entity, have recently withdrawn approximately 1,287,492 LINK tokens, valued at $17.5 million, from the Binance exchange within three days. This notable accumulation suggests insider confidence or advanced knowledge of forthcoming positive developments within the Chainlink ecosystem.

Analyzing the LINK/USDT chart, observers note an observable ebb and flow in Chainlink’s market valuation. Recently, LINK has been closely interacting with the 50-day Exponential Moving Average (EMA), a level known to act as dynamic support or resistance for asset prices. The current position below the 50 EMA signals a delicate situation for LINK, putting investor conviction to the test.

Strengths and Weaknesses in the Market

Strengths on the chart are evident through the recent accumulation by whales, which could translate into buying pressure, supporting a bullish scenario for LINK. Historically, whale activity often precedes significant price movements, indicating the possibility of positive developments within the Chainlink ecosystem.

However, the market also exhibits weaknesses, primarily reflected in the descending trading volume. This decline in volume suggests a lack of participation by retail investors, potentially capping any substantial rally. For LINK to sustain a price rally, consistent volume and renewed investor interest are imperative, yet these appear subdued at present.

Elliott Wave Theory and Price Predictions

Turning attention to Elliott Wave Theory, a methodology traders employ to assess future price trends, it is clear that Chainlink’s price movement has been a subject of interest. This analytical approach delves into long-term price patterns and investor psychology to discern prevailing trend directions. Current analysis suggests that Chainlink may have entered the fifth and final wave of its upward trajectory, which commenced in June.

Wave four of this cycle was concluded on January 3, with confirmation further solidified by a bullish candlestick observed on January 8. If this wave count proves accurate, it implies potential price targets for LINK at $23.40 and $30.40, signifying substantial increases of 65% and 115% from its present valuation, respectively. Importantly, the latter target converges with a resistance trend line within an ascending parallel channel alongside a horizontal resistance area.

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