The Chainlink price is making a fresh attempt to break higher overnight, and the current momentum suggests it may have more to go.
LINK was one of the biggest losers during the recent cryptocurrency rout. From the 9th of May high at $53.00 to the $15.00 low on the 23rd, it lost -72%.
Since then, the token has staged a v-shaped recovery, gaining +83% in the last three sessions to $27.50. Although still some way to, there are encouraging signs that the bounce may not be over yet.
Looking at the 2-hour price chart, we can see the severity of the liquidation on May 19th. LINKUSD started the day on a positive note, trading above $42.00. At its lowest point during the sell-off, it was trading at $20.00.
The much higher than usual trading volume suggest 2 things. Firstly, that huge amounts of longs had exited positions.
Secondly, buyers had bought the dip and chased the price higher on rebounded from the lows. The bargain-hunting spree lifted the price +62 from the low to $34.20.
Nonetheless, the rally faded, and the Chainlink price was making new lows within days. The second phase of liquidations punished the newly minted longs.
As soon a LINK broke below the $20.00 level, it triggered stop-loss liquidation. The high trading volume during the resulting 25% drop, was even higher than on the 19th.
This suggests that longs finally capitulated as the price plumbed new depths on the week.
Again, the market recovered, and the rally that followed has been much more orderly than the knee-jerk reaction on the 19th. This is a positive sign and suggests the rise is more sustainable.
Over the last 2 days, the Chainlink price struggled to break above the 0.382% Fibonacci retracement level from the high on May 19th. This morning, LINK has finally managed to break above the threshold at $26.40 and should now continue higher.
This should put the price on track to test the 0.50% Fibonacci at $29.90. I expect strong resistance between there and the 0.618% line at $33.44.
However, the bullish outlook will be negated if the price reverses and trades below yesterday’s low of $23.70.
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