The cryptocurrency market has been a rollercoaster ride in recent weeks, and Chainlink (LINK) has not been spared from the volatility. After reaching a high of $22 earlier this month, the price of LINK has continued its descent, now trading below the $16 mark.
According to a recent video analysis by popular YouTube channel “More Crypto Online,” Chainlink appears to have entered a larger Wave 2 correction phase, based on Elliott Wave theory. This correction is expected to be a pullback following the previous price increase.
The video suggests that the ideal target range for this Wave 2 correction is between $12.80 and $6.90, considered an accumulation zone for LINK investors. However, the analysts stress the importance of proper position sizing and vigilant monitoring due to the notoriously volatile nature of altcoin charts.
At the time of the video’s recording, Chainlink was trading at $17.27, still holding above the crucial 50% retracement level. The analysis highlights a specific support region that needs close monitoring, especially if a deeper pullback materializes.
While a further decline seems likely, the video indicates a possibility for Chainlink to achieve one more high before the correction intensifies. However, this scenario would require LINK to maintain its price above the critical $16.78 level, representing a 50% retracement from previous highs.
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Show more +According to Elliott Wave theory, the ideal scenario for the Wave 2 correction would be to reach at least the 38.2% Fibonacci retracement level. The video also suggests that the price could potentially reach the low of the previous Wave 4 of a lower degree, a concept intrinsic to Elliott Wave analysis.
Currently, Chainlink is attempting to hold above a micro support area and has touched the lower boundary line of a larger trend channel. If the Wave 2 unfolds as expected, it could follow an ABC structure, potentially hitting around $12.80, aligning with the previous wave four low of a lower degree.
The video discusses a potential trading strategy for those looking to capitalize on one more high, emphasizing the importance of a favorable reward-to-risk ratio. However, the analysts also note the unreliability of such a strategy at this stage.
Delving deeper into the micro structures within the price movement, the video suggests that Chainlink might have completed a five-wave move in a leading diagonal or an AB WXY structure. This could indicate readiness for a corrective bounce in wave B.
The nature of the next rally will provide further insights into the direction of the trend. If the rally is a three-wave corrective rally and encounters resistance in the area between $21.36 and $24.66, it could suggest that the next move down will be a C wave, according to the analysis.
A Non Technical Perspective
While technical analysis provides insights into potential price movements, experienced investors offer a different perspective. Nastardamus, a well-known cryptocurrency trader and investor, shared his thoughts on the recent Chainlink correction.
In a tweet, Nastardamus expressed comfort with the current 30% correction, having experienced similar drawdowns during the last bull market. However, he raised concerns about Chainlink’s tokenomics and the approach of the team, stating that “when 80-90% of the long-term holders complain and worry about it, something is clearly wrong.”
Despite the current downturn, Nastardamus remains optimistic about Chainlink’s long-term prospects. He believes that LINK could reach three-digit prices during this bull market, noting that the market is still in its early stages before the highly anticipated Bitcoin halving event.
Nastardamus’ comments highlight the divided sentiment among investors, with some expressing concerns about the project’s fundamentals while others maintain a bullish outlook, anticipating a significant price surge in the coming months.
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