Chainlink Price Rallies – Signaling End to LINK Correction – Is $20 Next?
Is LINK's Correction Over After Tokenization News? | Credit: Hameem Sarwar
Key Takeaways
- On May 27, the LINK price reached the highest price in 57 days.
- LINK price broke out from a 65-day descending resistance trend line.
- LINK also broke out from a short-term ascending parallel channel.
The LINK price reacted positively to news regarding the creation of a partnership with the Depository Trust & Clearing Corporation (DTCC) , breaking out from a long-term resistance trend line. Chainlink also broke out from a shorter-term channel and a horizontal resistance area, a sign that the correction is finally complete.
LINK trades right at the 0.618 Fibonacci retracement resistance level. Even though all signs point to the correction being complete, LINK has to move above this resistance to confirm the bullish hypothesis.
Will Chainlink Price Clear its Final Resistance?
The LINK price broke out from an ascending parallel channel on May 17 Then, it validated it as support on May 23 and resumed its increase, reclaiming the $16.80 horizontal resistance area. The increase led to a high of $18.83 on May 27.
The wave count suggests LINK is in the fifth and final wave of its upward movement. It is not clear if wave five has ended. The fact that the LINK price increase stalled at the 0.618 Fibonacci retracement resistance at $18.75 suggests it has, wave five can also extend to the $20.73 level, giving it the same length as waves one and three combined.
As long as the LINK price does not fall below the $16.80 area and back inside the channel’s confines, the most likely outlook remains a breakout from the 0.618 Fibonacci retracement resistance level.
If this happens, LINK can gradually move toward the next target at $20.73, which will be slightly below the yearly high of $22.89.
Chainlink Signals End to the Correction
The LINK price had traded inside an ascending parallel channel since its $11.96 low on April 13. After initially struggling to move outside the channel’s confines, the price finally broke out on May 20.
The breakout from the channel was critical since its resistance trend line also coincided with the $16.15 to $16.50 horizontal and Fibonacci resistance area. So, the movement above it is a sign the correction is over.
The wave count aligns with this possibility, implying the breakout is part of wave three and the ongoing retest is wave four. According to the count, LINK will begin wave five soon, increasing to the next resistance at $20. Then, another correction could ensue.
What is Chainlink’s Tokenization Fund?
After interoperability with Swift and on-chain asset settlement with institutional bank ANZ, Chainlink announced a partnership with DTCC and several other financial institutions to deliver fund NAV data across any blockchain.
In the pilot, Chainlink’s CCIP provides a secure layer between the blockchains and DTCC. As well DTCC, banks that participated in the pilot program include JPMorgan and Franklin Templeton.
One of the main takeaways is that the on-chain data can be used to create tokenized funds and smart contracts that hold data for multiple funds. This can have various uses cases in the future, starting with brokerage portfolio applications and automated data dissemination.
Tokenization has been a major area of interest for traditional finance institutions in 2024, the most notable foray being Blackrock’s BUIDL fund.
The LINK price reacted positively to the news, creating a bullish candlestick with a magnitude of 12% on May 16.
LINK Breaks Out After Bullish Pattern
The LINK price had decreased under a descending resistance trend line since March 11, when it reached a yearly high of $22.87.
The decline led to a low of $11.96 on April 13. Initially, this caused a breakdown from the $13 horizontal support area, which had existed for 191 days. However, the price created a long lower wick and reclaimed it the next day.
Over the next month, LINK created a triple bottom, considered a bullish pattern. Moreover, the pattern was combined with a bullish divergence in the daily RSI and MACD (green). On May 15, LINK broke out from the resistance trend line, which had existed for 65 days.
This validated both divergences and is a sign the correction is over. After the breakout, the RSI moved above 50, another sign of a bullish trend. The MACD has nearly crossed into positive territory.
LINK now trades inside the $16.10 Fibonacci resistance area. If it breaks out, the next resistance will be at $18.70. The 0.618 Fibonacci retracement resistance level creates this resistance.
LINK Price Prediction: Will the Increase Continue?
The daily time frame price action and indicator readings are conclusively bullish. While the most probable wave count also leans bullish, there is a bearish count that is still valid.
The most likely count suggests LINK completed an A-B-C structure with truncation on May 1. Then, it started a new five-wave upward movement that will take it to new highs. A breakout from the short-term ascending parallel channel will confirm this is the correct count.
However, the bearish count suggests that the increase is part of wave X in a W-X-Y corrective structure (black). In this possibility, the channel’s resistance trend line will reject LINK and trigger a decline toward $9.
So, the reaction to the resistance trend line will likely aid in predicting the future trend.
LINK Clears Resistance After Positive News
The LINK price reacted positively to the news of another partnership with a major financial institution. The price broke out from a diagonal resistance and a short-term channel.
While the price action and indicator readings are bullish, LINK has to clear a final resistance area to confirm its bullish trend reversal. Doing so will confirm that the price is in the fifth wave of its upward movement.
