Chainlink Forms Sell Signal, Analyst Predicts Pullback To This Level
One analyst highlighted how Chainlink is currently forming a TD sequential sell signal, which could lead to a retracement at this level.
Chainlink May Drop to $12.50 Following Sell Signal
As analyst Ali explains in a new job on X, LINK could be headed for a correction based on what the TD Sequential signal says. THE “Tom Demark (TD) Sequential” is a popular indicator in technical analysis that is used to identify reversals in the price of any asset (which, in the current discussion, is naturally Chainlink).
The metric gives a signal whenever the asset has seen nine candles following a reversal in its price. The signal is a sell signal if the candles are green, while it is a buy signal if the candles are red.
This phase is called “configuration phase.” Once the setup is complete, a long countdown phase of 13 candles begins. At the end of these 13 candles, one might think that the price has reached another likely low or high (depending on whether the phase started with a sell or buy signal).
Chainlink has recently benefited from very rapid growth, which led the price of the asset to reach highs not seen since April last year. However, this run could be headed for at least a temporary setback, as according to Ali, a TD Sequential setup phase appears to have ended recently for the cryptocurrency. The signal actually appeared on not one, but three price charts of the coin: daily, 3-day, and weekly.
Here are the charts shared by the analyst:
LINK appears to have completed a TD-9 setup | Source: @ali_charts on X
As seen in the chart above, the Chainlink TD Sequential setup phase ended with green candles on all of these LINK charts, implying that a reversal to the bearish side could be imminent for the cryptocurrency.
Ali predicts that the retracement would be towards the $12.50 level, which would mean a decline of over 18% from the asset’s current price level. “Failing to maintain this critical support zone could extend losses to $10.50,” the analyst adds.
Such a drop to $10.50 would suggest a drop of over 31% for Chainlink, but even if such a sharp drop occurred, LINK still would not have completely reversed the recovery it made since the last third of October, showing just how recent the asset’s bullish momentum has been.
It now remains to be seen what trajectory the asset takes from here given this bearish signal. So far, the odds are not in the coin’s favor as it has already seen two red candles since the pattern formed, implying that the countdown phase might have begun.
LINK Price
Chainlink surpassed the $16.5 mark over the weekend, but the coin took a hit over the past day as it is now near the $15 level.
LINK has more than doubled during the past month | Source: LINKUSD on TradingView
Featured image from Shutterstock.com, charts from TradingView.com
