Chainlink (LINK) Elliott Wave Analysis: Bullish Continuation Likely

Chainlink (LINK) is showing mixed technical signals, with bullish possibilities tempered by key resistance and potential retracements. Higher and lower time frame charts reveal an Elliott Wave structure unfolding, highlighting crucial Fibonacci levels and price behavior patterns. Momentum indicators suggest a cautious approach, as RSI divergences hint at reduced bullish momentum.

LINK Price Analysis 

The 4-hour chart shows LINK completed wave (3) at $30.81 mid-December. The peak at wave (3) was followed by a corrective wave (4) leading to a of $17.9. We saw the formation of the descending triangle with a price retracing to the 0.618 Fibonacci retracement support on Dec. 17.

The current consolidation in wave (iv) aligns with typical retracement zones. Thus the price started gaining momentum breaking above the descending trendline and rising to $27.2 slightly above the 0.236 Fibonacci level on Jan. 22.

The Relative Strength Index (RSI) on this time frame has shown bearish divergence, reflecting reduced buying strength during the recent uptrend. This suggests that momentum has weakened, raising caution for bulls. However, the price action maintains a higher low structure, keeping the broader bullish trajectory intact as long as critical supports hold.

Upside potential hinges on breaking through the $30.81 horizontal resistance zone, which corresponds to the wave (3) high. A breakout above this level could signal the continuation of wave (5), targeting higher levels above $30.81. Conversely, a failure to maintain above $25 (0.236 retracement) could result in deeper retracements toward $22.74 (0.382 retracement) or even $20.32 (0.5 retracement), invalidating the current wave count.

LINK Price Prediction

The 1-hour chart offers a detailed view of potential scenarios for the completion of wave (5). LINK is currently forming a bullish pattern, suggesting a possible breakout toward higher Fibonacci extensions.

Immediate resistance lies at $27.66 (0.618 Fibonacci extension), which aligns with the upper boundary of the consolidation zone. Breaking above this could propel LINK to $30.81, marking the end of wave (iii) within wave (5).

Alternatively, failure to break above $27.66 could lead to a pullback, testing $22.73 (0.382 Fibonacci retracement) as immediate support or even lower at around $20 (0.5 Fib retracement). The continuation of this downtrend would mean the correction in wave (ii) hasn’t ended yet.

Assuming the bullish breakout scenario unfolds, wave (5) is projected to extend toward $35.8 (1.618 Fibonacci extension) or slightly below $40 (2 Fib extension). However, a bearish divergence in the RSI indicates that upside momentum is fading, suggesting that any rally may be short-lived without renewed buyer enthusiasm.

The main question is whether or not the LINK finished its wave (ii) of a lower degree count inside the ascending channel, or still has one leg down before completion. But in both cases, we can anticipate more upside once this correction ends.

Key Levels to Watch

• Immediate Resistance: $27.66 (0.618 Fibonacci retracement).
• Key Resistance: $30.81 (1.0 Fibonacci extension).
• Major Resistance: $38.94 (2.0 Fibonacci extension), $41.17 (2.272 Fibonacci extension).
• Immediate Support: $25.73 (0.236 Fibonacci retracement).
• Key Support: $24.55 (0.382 Fibonacci retracement).
• Critical Support: $22.74 (0.5 Fibonacci retracement).
• Invalidation Zone: Below $20.32, the wave count invalidates.

Summary

LINK’s technical outlook points to a critical juncture, with a bullish wave (v) targeting higher levels if resistance at $30.81 is decisively broken. However, bearish RSI divergence and potential retracements caution against over-optimism. Monitoring key levels, including $25.73 and $22.74, will be crucial to assess the broader trend’s health.