ChainLink Analysis - Is A Breakdown To $5 Imminent?Hello Trader, here is my analysis for LINKUSD.
Link has potential, it's not nearly as bad as FTM or ADA which we looked at recently. In fact this year I've taken a few long positions at Major Support levels, knowing that a bounce was likely. The problem is I am extremely Bearish on Bitcoin at the moment and as we know Alts will follow. Despite Bearish price action, Rip your face off rallies still occur during a bear cycle. This is when we look to enter long positions!
Before I even start... LINK will continue to have Bearish price action until it breaks out of the falling wedge. You'll most likely know when LINK has hit its bottom because it will break the formation to the upside signaling a reversal.
How do we predict where the bounces will occur?
- Typically bounces occur at Key/Major support levels.
- There are other factors that come into play such as time counts, how quickly it hits the level, any consolidation before hitting the level, etc.
- But just to keep it simple, we want to look for key support levels to take longs.
But if Alts follow BTC and we enter a position in LINK at a key support level, how do we know it will bounce? Can't BTC bring it down?
- The key here is to try and align the major Support and Resistance levels of whatever Alt you're trading with BTC.
- So if it looks like BTC is about to hit a key support level and so is LINK, then chances are they will both bounce since they hit the levels at the same time.
- On the reverse, if BTC is about to hit a major level but LINK is not, BTC can bounce but LINK might not.
***Perfect example is right now LINK is not at a key support level, while Alts like Avax and Matic are. Both go great bounces along with BTC while LINK not so much.
So where is LINK headed?
- As you can clearly see LINK has been trending down in a falling wedge formation.
- Yes this is technically Bullish, but LINK could continue to trade between it for months before breaking out.
- Until Link breaks out of the formation, it will continue to act as support & Resistance.
- You could always short at the top and long at the bottom of the formation.
- The key support levels are listed on the chart, as long as BTC keeps trending down, LINK will follow.
- Each time a Key Support level is broken, that confirms downside continuation and the target is the next support level.
- $7.12 is a Major support level, there is a high probability LINK gets a bounce there especially if it comes down straight into it over the coming month without much consolidation.
How low can LINK go?
- IMO I believe LINK will hit $5 in the coming months, it's even possible it goes lower. But for now I think $5 will be the low.
- Link will gets bounces along the way but until it breaks the formation to the upside, I personally would not enter a long term position.
What about the short term?
- The next target for LINK is $10, it may get a bounce being as it's a psychological level. But I think when it retraces it will break quite easy and continue lower.
- Then $7.12 where I would be expecting a larger size bounce, especially since it's been trending down for nearly a month.
Thanks everyone and best of luck trading!
