Will Chainlink Price Extend Its Correction Below $12? Chart Pattern Offers Insight

Amid the recent market sell-off, the Chainlink price witnessed a notable reversal from the $16 psychological level. This new lower high formation in the daily chart indicates the sellers are still dominating the price movement and have plunged the asset to $13.7, registering a weekly loss of 14.4%. If the supply pressure persists, the LINK price could retest the multi-month support at $11.8, indicating the potential of a bullish reversal.

Also Read: Bitcoin and Altcoins Come Under Pressure Ahead of Fed’s Interest Rate Decision on May 1

Will the Falling Wedge Lead to a Bullish Reversal?

Over the past seven weeks, the Chainlink price has witnessed a steady correction trend evidenced by a falling wedge pattern in the daily chart. Under the influence of this setup, the bears led lower high formations signaling the traders are actively selling on a bullish bounce.

However, the 50% Fibonacci retracement level around $13.82 level has stalled the falling price, resulting in a 1.14% intraday jump. In a recent analysis by the prominent trader @alicharts, a buy signal was identified for Chainlink (LINK) on the 12-hour chart. This technical indicator, known as the TD Sequential, suggests a potential upward movement for LINK if it sustains above the support level of $13.87. 

The TD Sequential is flashing a buy signal on the #Chainlink 12-hour chart! If $LINK stays above the $13.87 support, we could see a strong rebound to $15.50. pic.twitter.com/BJgvEtzUho

— Ali (@ali_charts) April 28, 2024

Should the cryptocurrency maintain this critical support, the trader hints at a strong rebound to the target price of $15.50. This potential upswing could breach the overhead trendline of the wedge pattern and signal a better confirmation of a renewed recovery trend.

A post-breakout rally could bolster buyers to chase a potential target of $18.6, followed by $20.7 and $22.86.

On a contrary note, if the broader market correction prolongs, the LINK price is likely to retest the pattern’s support at $11.72 to seek buying liquidity. Until this lower support is intact, the Chainlink coin holds a strong potential for bullish reversal.

Technical Indicator:

• Experimental Moving Average: The LINK price trading below the 200-day EMA provides the sellers an upper hand over this asset.
• Directional Movement Index: A negative crossover between the DI+(blue) and DI-(orange) slope indicates the correction trend is active.