Home / Analysis / Crypto / Technical Analysis / Chainlink Price Reclaims 160-Day Support Amid RSI Drop to Two-Year Low — LINK Bounce Incoming?

Chainlink Price Reclaims 160-Day Support Amid RSI Drop to Two-Year Low — LINK Bounce Incoming?

Last Updated April 19, 2024 9:08 AM
Valdrin Tahiri
Last Updated April 19, 2024 9:08 AM
By Valdrin Tahiri
Verified by Peter Henn

Key Takeaways

  • The LINK price has fallen over 40% since its yearly high on March 11.
  • Chainlink’s price bounced on April 13 and reclaimed a 160-day support area.
  • Is the LINK correction over or will the price break down below support?

Chainlink’s price was at risk of breaking down from a long-term horizontal support area on April 13, but the ensuing 15% bounce caused the price to reclaim the area and invalidate the breakdown.

An interesting bullish signal is developing in the RSI. The same signal preceded the upward movement lasting the entire second half of 2023. When combined with the reclaim of the support area, it makes it possible that a similar increase will follow in the upcoming months.

LINK Reclaims Horizontal Support

The LINK price has fallen since reaching a yearly high of $22.86 on March 11. The decrease led to a low of $11.78 on April 13. This was a drop of 48% since the yearly high. The low seemingly caused a breakdown from the $13.25 horizontal support area, which has existed for 163 days.

However, LINK bounced, creating a long lower wick (green icon) and reclaiming the horizontal support area. The price did the same thing on April 19, and is in the process of creating a bullish daily candlestick.

LINK Price Reclaims Support
LINK/USDT Daily Chart | Credit: TradingView

The daily RSI provides a bullish reading and supports the upward trend. On April 13, the indicator fell to its lowest value in two years. Afterward, it created a bullish divergence (green). The previous time this occurred was in June 2022, preceding the 370% price increase and leading to the yearly high on March 11.

LINK Price Prediction: Can a Similar Upward Movement Follow?

The daily time frame wave count shows that LINK completed a five-wave upward movement starting in June 2023, the same time the RSI gave the bullish signal. Afterward, it finished an A-B-C corrective structure.

The fact that the RSI signal coincided with the start of the upward movement leads to the possibility that the same thing will happen now.

However, while the correction is deep enough, having reached the 0.618 Fib retracement support level, it is brief relative to the preceding increase. The LINK upward movement lasted for 275 days, while the correction only for 33.

LINK Price Completed Wave Count
LINK/USDT Daily Chart | Credit: TradingView

A closer look at the A-B-C corrective structure displays that the LINK price is either in the fifth and final sub-wave of the correction or has already completed it.

Since sub-wave three extended, it is possible that sub-wave five is truncated, meaning it does not go below the sub-wave three low. If not, a slightly lower low can be created before the correction ends.

LINK Price Short-Term Correction
LINK/USDT Six-Hour Chart | Credit: TradingView

The six-hour RSI and MACD suggest the correction is over. Both have generated bullish divergences since April 13, a sign often associated with a bullish trend reversal. The signal is particularly strong when combined with the one in the daily time frame.

LINK Correction Nearing Its End

LINK’s daily time frame price action and RSI both suggest the correction has ended. On the other hand, the short-term wave count suggests LINK may create a slightly lower low before completing its correction. In any case, it seems that LINK  is nearing the end of its correction and will soon resume its previous upward trend that encompassed the second half of 2023.

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