In the previous weeks, Chainlink (LINK) reversed its downtrend and reclaimed the long-term support area near $24.10. If the altcoin maintains its strong momentum, it could see a strong upward move in the second half of August.
LINK long-term movement
Chainlink recorded the all-time high at $53 on May 10, 2021. Almost on the same day, a deeper correction in the crypto market began. LINK in a two-week period lost 72% of its value, measured to a low of $15 on May 23.
It later tested this support area (green line) one more time on June 22. Just at the end of the long-term correction, it deviated slightly below (orange ellipse), reaching $13.40 on July 20. Since then, Chainlink price has been rising, and the weekly chart is in the process of printing the 5th consecutive green candle.
The technical indicators on the weekly timeframe are neutral/ bullish. The RSI is above the 50 line and rising. The indicator has turned back from the 42 level, where it was for the first time in almost 3 years, since December 2018 when LINK cost around $0.20.
MACD is generating weaker bars of negative momentum and is very close to entering the positive territory of both the signal line and the momentum bars (green arrow). The stochastic oscillator is dynamically heading upwards and is in the process of crossing neutral territory.
Chainlink reclaims support
The daily chart gives a decisively bullish reading and shows a reversal of the downtrend. The price of LINK has risen from the aforementioned low at $13.40 on July 20 to today’s peak at $30.50. This is an increase of 128% in just 26 days.
LINK first recorded a higher high above resistance near $20, only to later reclaim an important level at around $24.10. This area has repeatedly acted as long-term support / resistance and coincides with the level of the highest volume of the VPVR indicator (red line).
Moreover today, LINK broke out above the important 0.382 Fib retracement level measured for the entire downward movement. The targets for the continuation of the uptrend are the areas of $33.20 and $37.90, which correspond to the 0.5 and 0.618 Fib retracement.
In addition, the volume signature (blue diagonal) has been declining since the May 23 capitulation. Its descending trendline has not been broken through with the reversal of the downtrend. This means that we can expect increased volatility and a big move for Chainlink around late August or early September.
The technical indicators are bullish and support the outlook for a trend continuation. RSI is rising and sits in bullish territory above the 70 line. MACD is again generating increasing bars of positive momentum after a few days of correction. The stochastic oscillator is high in bullish territory and shows no signs of weakening the trend.
A look at the 4-hour chart shows an ascending parallel channel that has been in place since the 20 July low. The median of the channel, above which altcoin was in the first phase of growth, is crucial in this formation. LINK lost it on August 8 and since then the median has acted as resistance.
Cryptocurrency trader @yCryptoGang tweeted a chart of Chainlink today that includes a trendline very close to the median line of our parallel channel. In his view, the recovery of this line and its subsequent re-test as support could be the catalyst for a strong continuation of the upside.
This scenario is possible, although currently LINK has been rejected by this line for the third time. However, if a breakout in the volume signature mentioned in the previous section occurs, further upside along this aggressive trendline is likely.
For BeInCrypto’s previous bitcoin (BTC) analysis, click here.
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