- Chainlink price building a bear flag formation after steep decline through May and June.
- Bearish Death Cross pattern triggered on June 30, increasing the pressure on the digital asset.
- LINK locked below the strategically important 50-week simple moving average (SMA), further amplifying pressures.
Chainlink price has been quietly plotting a bear flag pattern since the June 22 low, tempting investors to buy LINK. Nevertheless, a break below the flag’s lower trend line will trigger the pattern and introduce a renewal of the May-June correction.
Chainlink price so close, yet so far from shining again
Chainlink price has presented investors with a corrective bounce following the 70% decline from the May 10 high of $52.99, putting the cryptocurrency above the descending May trend line. However, the rally has not been impulsive, and volume has been gradually decreasing as it advances. As a result, Chainlink price has formed a bear flag pattern.
Compounding the bearish LINK outlook is that the pattern is developing below the 50-week SMA. It is the first time below the moving average since March 2020 and may confirm a change in the larger uptrend of 2020 and 2021.
Additionally, Chainlink price triggered a bearish Death Cross pattern on June 30 when the 50-day SMA crossed below the 200-day SMA.
The measured move of the bear flag pattern is approximately 30%, projecting a final Chainlink price of $13.00. The decline would smash the support fortified by the May 23 and June 22 lows at $15.00 and potentially drive the daily Relative Strength Index (RSI) into an oversold condition, setting the foundation for a more substantive rebound.
The trigger for the formation is a decline below the flag’s lower trend line, currently at $18.20. Some support may materialize at May’s descending trend line, but the robustness of the formation should carry Chainlink price to the measured move target of $13.00.
LINK/USD daily chart
Critical to the bear flag thesis is for the resistance vested in the 50-week SMA at $21.06 to hold on a closing basis. If the moving average fails, the bearish outlook would be invalidated, and set Chainlink price free to discover higher prices, including a test of the 50-day SMA at $23.45. A rally to the 200-day SMA at $27.20 remains a low probability event in the short term.
LINK/USD weekly chart
Bear flag patterns are deceptive because they run counter the downtrend suggesting that the cryptocurrency (in this case) has bottomed and is beginning a new, purposeful rally. However, as soon as it looks promising, the bears reappear, steal control and aggressively push the price lower.
At this moment, Chainlink price is at an inflection point in its bear flag pattern. Based on the current price structure, the probabilities are still tilted towards a bearish resolution, erasing the brief shining moment and returning LINK to the hard realities of a bottoming process that follows a rapid, 70% crash.
Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
Recommended Content
Editors’ Picks
Bitcoin reaches new highs near $90,000, on-chain data show chances of pullback
Bitcoin hit a new all-time high of $89,900 on Tuesday before easing to around $86,000, following a 30% surge since November 5. Technical indicators suggest the rally may be overstretched, with a potential corrective pullback ahead.
GIGA investor loses $6M to phishing scam via fake Zoom link
On Monday, a Gigachad (GIGA) investor lost $6.09 million due to a phishing attack involving a fake Zoom link. Crypto investigation firm Scam Sniffer declared the scam that led the victim to a malicious site, compromising their wallet.
Tron, Avalanche and Uniswap: Double-digit gains on the cards, technical indicators show
Tron is breaking above an ascending triangle formation on Tuesday, signaling a potential rally continuation. While AVAX and UNI are retesting their crucial support level — if supported, this suggests an upside move — all three altcoins look poised for double-digit gains as the crypto rally continues.
BNB: Bullish technical pattern validated, eyes all-time high
Binance Coin trades slightly down on Tuesday after breaking above an ascending triangle formation on the weekly chart, following a 12.5% rally last week. The technical outlook suggests a bullish breakout pattern and continuation of the rally, with a target set for a new all-time high of $825.
Bitcoin: Further upside likely after hitting new all-time high
Bitcoin hit a fresh high of $76,849 on Thursday as crypto-friendly candidate Donald Trump won the US presidential election. Institutional demand returned with the highest single-day inflow on Thursday since the ETFs’ launch in January.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.