Chainlink price risks 30% decline in May as LINK paints a bearish continuation pattern

Key Takeaways:

  • Chainlink (LINK) four-hour chart spells a short-term sell-off based on a Rising Triangle setup.
  • The regression target stands at $5, which could also constitute a rebound level.
  • The weekly chart signifies that the bottom is near, as it formed a bullish Falling Wedge.
image from medium.com
image from medium.com

YEREVAN (CoinChapter.com) – Chainlink (LINK) has been wobbling between profits and losses this May 2020, indecisive about its next directional bias. Meanwhile, it has also been forming a bearish continuation pattern that could have its prices slide by nearly 30%.

Dubbed the ‘rising triangle,’ the pattern appears when the price trends inside a range defined by a horizontal trendline resistance and rising trendline support. These triangles typically resolve after the price breaks out in the direction of its previous trend.

Also read: Bitcoin (BTC) holds $30K and hints at bottoming out – here's why.

Since LINK was falling before it formed a rising triangle, the token’s bias — as a rule of technical analysis — remains skewed to the downside. Suppose it breaks below the lower trendline, then its downside target could be at a length equal to the maximum distance between the triangle’s upper and lower trendline.

Chainlink (LINK) four-hour chart, featuring a rising triangle. Source: TradingView.com
Chainlink (LINK) four-hour chart featuring a rising triangle. Source: TradingView.com

Therefore, the rising triangle’s bearish scenario pins the target price for Chainlink (LINK) at around $5, down about 30% from current prices.

Bullish on long-term charts

The weekly chart suggests that LINK would bottom out after dropping to $5, as the price action on a higher time frame formed a Falling Wedge, marking rising bullish potential.

Chainlink (LINK) weekly chart featuring a Falling Wedge. Source: TradingView.com
Chainlink (LINK) weekly chart featuring a Falling Wedge. Source: TradingView.com

The bullish reversal setup features two converging trendlines with a negative slope that enclose the price action and drive the value down while lowering the price swing. The Falling Wedge forecasts a bullish break after the formation is exhausted.

Moreover, the seventh consecutive bearish week resulted in LINK retesting the Wedge’s support, solidifying upside move expectations. If traders act along with the long-term bullish predictions, LINK could reach over $20 by the end of 2022.

Also read: Chainlink price eyes 150% rally as LINK forms' bullish wedge' pattern.

Notably, the Falling Wedge does not contradict the Rising Triangle on the 4h chart. If the latter pans out and the Chainlink token regresses, it would hit a significant rebound level and possibly follow the bullish formation as well.

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Chainlink, Chainlink price risks 30% decline in May as LINK paints a bearish continuation pattern

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