LINK Is Not Immune - Bearish Ascending Broadening Pattern
Updated
Chainlink has had an amazing run. However, I don't expect it to be immune to the gravity that ultimately affects the cryptocurrency market.This second rally is on lower volume, which may be considered bullish, except for the fact that the previous peak occurred on MASSIVE volume. Based on my experience observing and trading this market, high volume often indicates a top. I actually wanted to post a short setup during that first peak but held off. Now we have a second chance to look at more potential massive downside for LINK/BTC. We can also see that the weekly ultimate oscillator (red) is finally nearing the sell zone, which DID NOT happen on the first peak. The daily RSI is also plenty overheated, and the weekly RSI is failing to make a new high here.
Maybe this is "the one." I thought the same about SLT, but it ended up with a very similar pattern to LINK/BTC. It formed a second peak on lower volume and ultimately dropped over 90% in Bitcoin value afterwards, even though it outperformed almost every other altcoin during 2018 (I'm not kidding). So...there's no reason for me to assume that LINK will get special treatment, although its higher liquidity should temper downside a bit. Potential targets are shown on this chart. I may actually trade for some LINK if it approaches those levels, and particularly if it heads all the way back towards the 6500 level.
The one bullish possibility I see here is that a number of established alts look like they want to start bull runs. What happens to LINK in that case? Likewise, what happens if LINK dumps hard here, as the chart suggests could easily happen? Do other alts follow? The altcoin market generally moves together, but there are a few anomalies. If LINK can actually break out of the broadening wedge pattern to the upside, we could see some parabolic gains for this particular cryptocurrency before a long period of consolidation is reached. Then perhaps it can drop, once the next bullish cycle for the market ends. I do think we could eventually see lower than current levels for LINK/BTC, even if it continues up from here. For potential upside, I think it can test the top of the broadening wedge again, right now somewhere just below 0.0005000. But this is also why laddering sells is important. Yes, it can get up there, but I think there's also a strong chance it drops heavily beforehand.
This is not financial advice. I also do not hold any LINK. I just wanted to finally post a chart on this particular crypto. This should only be used for future reference and educational purposes.
- Victor Cobra
Maybe this is "the one." I thought the same about SLT, but it ended up with a very similar pattern to LINK/BTC. It formed a second peak on lower volume and ultimately dropped over 90% in Bitcoin value afterwards, even though it outperformed almost every other altcoin during 2018 (I'm not kidding). So...there's no reason for me to assume that LINK will get special treatment, although its higher liquidity should temper downside a bit. Potential targets are shown on this chart. I may actually trade for some LINK if it approaches those levels, and particularly if it heads all the way back towards the 6500 level.
The one bullish possibility I see here is that a number of established alts look like they want to start bull runs. What happens to LINK in that case? Likewise, what happens if LINK dumps hard here, as the chart suggests could easily happen? Do other alts follow? The altcoin market generally moves together, but there are a few anomalies. If LINK can actually break out of the broadening wedge pattern to the upside, we could see some parabolic gains for this particular cryptocurrency before a long period of consolidation is reached. Then perhaps it can drop, once the next bullish cycle for the market ends. I do think we could eventually see lower than current levels for LINK/BTC, even if it continues up from here. For potential upside, I think it can test the top of the broadening wedge again, right now somewhere just below 0.0005000. But this is also why laddering sells is important. Yes, it can get up there, but I think there's also a strong chance it drops heavily beforehand.
This is not financial advice. I also do not hold any LINK. I just wanted to finally post a chart on this particular crypto. This should only be used for future reference and educational purposes.
- Victor Cobra
Note
Already a 10% drop since yesterday. If Bitcoin starts trending up again, perhaps altcoin ratios will suffer again...but I’m not sure if they’d be able to head to new lows. I still think there’s decent upside for many alts. If other alts get going, maybe LINK won’t reach my lower targets for a while. I just posted this analysis because I figured LINK would also eventually correct hard on the ratio, just like every single other alt.
Note
It looks like other alts have followed LINK in this dump. As I mentioned below in a comment, I'm curious to see if LINK will continue to perform in tandem with other alts, or if it can cool off on its own while coins like ETH and XRP rebound on their ratios.Note
This is an important horizontal level for LINK. We got our selloff, which I was expecting from the recent peak, but altcoins may start to regain some strength here, so we should watch to see if it can bounce from this area. A break below here could send it down to test those moving averages. Note
LINK has bounced from the noted support area and is testing the same resistance again. The sell volume on the recent rejection just wasn't really high enough. To really confirm the next top for LINK, I think we need to see some pretty impressive volume.Note
I'm starting to believe that LINK should begin its long term decline against Bitcoin here. It can, in fact, head all the way back to its initial launchpad, which is over 90% down from here. The wedge ascending resistance was confirmed by the enormous sell volume on the first peak from June. Note
LINKBTC is now below all its major daily moving averages. If it can't get back above the 200 here, I think it can head to some much lower supports. It's dipped below it before and rebounded, but it wasn't able to make a new high. I think confirmation for further downside will happen if LINK breaks the orange trendline. Then LINK can behave like almost every other alt and retrace much of its gains against Bitcoin. 
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.