Chainlink (LINK) price rebounded to its 200-day moving average.
He overcame an ascending bevel.
The price probably completed Wave A with a correction in ABC
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The course Chainlink (LINK) increased by 41% on 24 September. Although it has broken out of a bullish pattern, its current move is probably still more of a correction than the start of a new upward move.
The LINK bounces on its support
LINK price declined along a descending resistance line from its August 17th high at $ 20.71. This decline was significant, continuing until the price hit a low of $ 7.28 on September 23. This move also validated the $ 7.50 area as support.
The $ 7.50 area is also reinforced by the presence of the 200-day moving average (MA). When price reached this zone, it created a bullish Japanese overlap candlestick, going up to $ 10.40 in a single day. This increase was 41%.
Price is now looking to break above the minor resistance at $ 10.40 and possibly the descending resistance line drawn from the highs.
Cryptocurrency trader @PostyXBT said in a tweet that price is approaching 200-day MA support. As seen in the chart above, the price started a very strong rebound when it hit this moving average.
Reversal or relief?
The six hour chart shows that the price has breached a descending resistance line. This advance was preceded by a considerable bullish divergence in the RSI like the MACD, making it all the more valid.
That said, the daily chart does not confirm the uptrend. The RSI is below 50 and the Stochastic Oscillator has not formed a bullish cross. The MACD has just started to rise, creating a higher momentum bar.
Until the price breaks its long term resistance line or a bullish cross has appeared in the Stochastic Oscillator, we cannot say that the trend is upward.
Since the aforementioned high on August 17th, the LINK price has completed a bearish five wave formation (in black below). Knowing that waves 1 and 4 overlap, it is likely that the movement is a dominant diagonal, which is also supported by the bevel-like shape.
In addition, the volume declined during the bottom of wave 5, before rising during the advance, which is common in such movements.
Longer term, it is possible that this entire decline was wave A (in orange) of a longer term ABC correction.
In this case, the price could rise to the fibonacci level 0.618, at $ 15.26, before resuming its downward movement.
In conclusion, although the price of LINK is expected to rise in the medium / short term, it is more likely that it is still embarked on a correction in the longer term.