Since November 22, cryptocurrencies have been tentatively coming out of their slump. So much so that news of FTX’s bankruptcy is partly incorporated into prices. And indeed, its total market capitalization is back to slightly above $800 billion.Should this be considered as a first sign of a renaissance Or is it another bullish correction in a bear market since the last ATH in November 2021?
At the moment, some are trying to positively distinguish themselves, such as Chainlink (LINK). Yes, it is true, the cryptocurrency oracle is bouncing off major support with the feat of not making new lows for the year. However, it is approaching a glass ceiling that it has been tripping over since last June.
And in a market context that alternates between hope and concern, Let’s see what can come out of the hat according to the latest technical analysis.
Chain in weekly units – $5.5 to $9 range.
Chain link prices follow. range or horizontal channel between support at $5.5 and resistance at $9.0. And this has been going on since the last low of the year back in May. Despite the bearish candle during the week of the FTX bust, they did not flinch so much that the $5.5 propelled them to the top of the range. At the same time, the current bearrun downline is in the buyers’ sights.
Even better, Weinstein’s Phase 4 appears to be under threat. And as a sign, the 30-week moving average (weekly MM30) is seeing its bearish momentum slowing considerably. In addition, cryptocurrency investors would look favorably on technical indicators moving toward their respective waterlines, especially the MACD’s continued bullish crossover from the signal despite the FTX’s negative downside.
Assuming LINK prices break free of the downtrend line, they would attack the top of the range. As you will notice, 9 is currently a glass ceiling that is difficult to break. If broken, we would target resistance at $12 and $18 respectively to erase the last spring correction wave.
After a first frustrated foray above the 200-day moving average. (daily MM200) for reasons we now know, Link prices try to cross it again. With the added advantage of crossing the descending line that would eventually be validated in daily units. And on the other hand, the MACD and RSI have clearly recovered above the zero line and the neutrality zone at 50 respectively.
This succession of favorable signals on the chart could lead us to a neutralization of the bear market in Chainlink since its last ETS in May 2021. Especially since the downward slope of the daily MM200 is gradually reducing. And the current sustainability of the range is not unrelated to the sellers’ inability to drive the nail.
Assuming the rules of technical analysis are followed, an exit from a range Theoretically, a long duration in either direction would favor explosive motion. In the event that LINK prices manage to definitively break $9, we would unleash significant upside potential towards the resistances mentioned above on the weekly chart.
Conversely, a relapse through a range breakout from the bottom would accentuate the LINK bear market. Sellers regain appetite by targeting the $4 and $1.5 supports. This would coincide with the birth of a third wave of correction. after those of May-July 2021 and November 2021-May 2022.
LINK – A convergence of favorable signals in an uncertain market context.
Although we are seeing a convergence of favorable signals in Chainlink prices in both weekly and daily units, cryptocurrency investors should not rush to claim victory. And not only that, the breakout of the $9 resistance or the top of the range is not a foregone conclusion. But the recent rebound may be based on a natural fading of the impact of the FTX bankruptcy as the sessions go by.
Until we can correct the losses from last spring’s corrective wave, there would be no reason to consider a final capitulation by sellers. While it is plausible that they are under pressure, higher highs than the previous highs have not materialized. And based on this chart observation, the LINK bear market since its last ATH in May 2021 is still alive whether you like it or not.
With Fed monetary tightening likely to continue for a while longer, the return of the ALTSeason would risk being put on hold. In this regard, we fear that The last words of Jerome Powell be misinterpreted again, as happened last summer. Many investors would believe that the old accommodative monetary policy prescriptions would soon return.
In a market environment in which U.S. inflation is falling but remains high at the 2% target, we might wonder if the Fed’s latest meeting in mid-December could deliver an unpleasant surprise. In which case, we would remain in an environment Risk deactivated where caution shall prevail.
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