It’s no secret, ChainLink (LINK) has been burning a path through the altcoin markets, as it has done throughout 2019. But now, after a breakneck rally from September’s lows, LINK has been rejected at previous highs -- a very predictable reaction given the rally’s intensity. Now we consider where a retrace might land, and if the rally might have more steam.
Starting on a daily LINK/BTC chart, we see the correction that has begun at around 36,000 sats. LINK was very overbought, and it was no surprise to see selling at these levels, which comprised the previous upper limits of the chart.
One of the obvious questions here is: where might the retrace land? The first stop is at 28k sats, and if price is actually held here it will be a very bullish result. However, more likely -- or at least a safer bet -- is a retest of the main breakout point around 24k sats, where there are multiple historical responses.
But of course, there is no guarantee that a longer term uptrend will continue. To try to figure this out, we can look at a 12-hour LINK/BTC chart with indicators. We must note that, during the entire rally from mid-September, there was no flagging in any of the indicators: RSI was straight higher highs and lower lows, and same with the histogram. Volume also kept up, with a steady glob of buying since the 6th.
Only the obviousness of the extremely overbought conditions, within a zone of clear resistance, was enough to break this strong ChainLink rally.
Finally, looking at a weekly chart with EMA fan, we must note that the fan has resumed spreading out in a completely bullish configuration (with the smallest EMA on top). It takes a long time to move anything on a weekly chart, and the recovery of the fan -- which briefly started to collapse -- could signal a serious long term strength for this popular altcoin.
We will have to watch the intensity of the retrace, and use that information to judge whether or not we can get another huge leg up with ChainLink. For now, though, it would be quite unwise to buy.
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