Chainlink Analysis: Key Patterns and Downside Risks 2024.12.29
2024-12-29
Category: None

Hello, this is Greedy All-Day.
Today’s analysis focuses on Chainlink (LINK).

Weekly Chart Analysis



Looking at the weekly chart, Chainlink recently broke above the long-term resistance trendline in the green box, pushing past the previous resistance level at $21.

However, the price has now entered a corrective phase, potentially retesting the trendline.

Chainlink has dropped approximately 30% from its 2024 high.

Daily Chart Analysis



On the daily chart, the short-term ascending trendline was broken some time ago. After a retest, the price appears to have resumed its corrective trend.

A key concern here is the development of a Head & Shoulders (H&S) pattern, with the neckline break being the final confirmation for further downside.

Neckline and Entry Considerations



The H&S neckline is marked with the green trendline.

For conservative entries, I recommend waiting for the price to fall below the 60 EMA on the daily chart before entering.

Targets:

The first target is the demand zone in the blue box, specifically at the $16 level.
If $16 breaks, it would signal the end of the bullish phase, with further downside likely.
The H&S pattern target suggests a potential drop to $9.

Volume Analysis



The volume supports the completion of the H&S pattern, showing a gradual decline in buying pressure.

This weakening buying momentum increases the probability of further declines if the neckline is broken.

Conclusion

Chainlink has shown strength in breaking the long-term resistance trendline, but the recent corrective phase raises concerns:

Weakening buying pressure during the decline suggests the potential for further downside.
If the current level fails to hold, Chainlink may enter the Ichimoku Cloud, signaling a trend reversal and opening the door for a 50% decline from current levels.

Recommendation:

For now, I recommend observing the market rather than taking new long positions. Waiting for confirmation of support or a significant breakout is the safer approach.

Let’s trade smart and stay ahead of the market. 🚀