The price of ChainLink has recovered by 99% from its lowest point on the 29th of June coming from $0.165 to $0.332 where it is currently trading.
After the price hit its lowest we have seen a powerful green candle which led to a breakout from the triangle in which the price was correcting and the price action has currently formed an ascending channel. Will this propel the price further upward as this is a start of an uptrend or is this only a recovery after the oversold conditions before another drop in price we will discuss in today’s analysis.
Looking at the LINK/USD daily chart I have labeled my Elliott Wave count and spotted some chart patterns.
As you can see after a 12345 impulse wave a corrective triangle structure was formed inside which an intermediate WXY followed by another WXY in the opposite direction occurred. The last two wave I will examine further but as I see it the current ascending channel in which the price recovered by 99% is still the part of a correction and not a breakout structure.
Zooming into the 4-hour chart I have extended my resistance line from the W and Y wave ending points which is minor triangle resistance line which got broken in this last upward swing. The price has been stopped out at the 0.382 Fibonacci retracement level slightly lower than the last high which indicates that upward momentum is slowing down.
As far as Elliott Wave count is concerned, after the second intermediate WXY correction in the opposite direction, an impulse wave to the downside occurred whos wave 5 target was the mentioned lowest points at $0.165. So this current ascending channel structure is definitely a recovery before the price can make new lows potentially to $0.1239 which was the lowest price has ever been for a retest of support. Inside of the ascending channel, I have labeled another minor WXY in the opposite direction but as the current wave hasn’t developed enough for me to properly label the last two waves we are going to zoom into the lower time frames to further inspect the price movement.
Zooming into the hourly chart we can see that the correction inside of the ascending channel is a complex one.
At the moment we are seeing the end of the second intermediate correction wave X and as the price broke out off of the minor triangle’s resistance I am expecting the price to go back down to that resistance for a retest of support which would be the last wave Y. After that, I would be expecting another third corrective structure in the opposite direction whos target I have projected up to 0.618 Fibonacci retracement level at $0.441 where the channels resistance line is. Those three corrections would form whats known as a double three correction.
Zooming out to the daily chart again we can now see the whole picture clear. The impulse wave to the downside after the second intermediate correction is the W wave from the third consecutive (and final) correction. The correction inside the channel is the wave X and after that, I would be expecting more downside for the price of LINK as the final Y wave would lead up to lower lows.
The target for the final Y wave would be either on the lowest the price has been which is the labeled horizontal level on $0.12 or even lower than that. The target would depend on the primary X wave hight – the higher the price of the X wave the lower the price of Y wave.