Chainlink TA 2/12/20: New ATH $7?

Chainlink Technical Analysis 2/12/2020

Chainlink has seen impressive price performance during crypto winter and with Bitcoin back on the rise above $10,000 a flood of retail money is now expected to enter the market as people rush to get in on the gains.

This is the exact momentum that Chainlink needs to push it into a new price discovery phase, as the most recent 2 Day candle has closed above the previous high close of $3.70 painted in June 2019. If the current momentum can be sustained, Chainlink is expected to break above previous all time highs of $4.80 and enter uncharted territory with huge upside potential.

Technical Analysis for Chainlink is surprisingly simple because it has painted such a beautiful market structure over the past couple of years. The 2 Day chart is all we really need to see what’s happening.

Chainlink Technical Analysis 2/12/2020
The Chainlink 2 Day Chart

Fibbonacci Levels

Chainlink’s Fibonacci levels on the two day chart are nearly perfect. In the chart above we have taken two different fib measurements.

The first is the retracement level measured from the previous parabolic rally that went from $0.19 to $3.71. After this huge gain of 1815%, price retraced 61.8% to the golden ratio level at $1.50 before carving out a range up to around $2.87.

The second measurement is an extension of the prior rally down to the retracement level. This gives us an idea of what levels might show resistance, typically the 1.0 and 1.618 are most significant. These levels are confirmed by the confluence we see at the 0.382 levels where price met resistance a few times before breaking higher.

Given how nice these two measurements play together, its not unreasonable to expect Chainlink to reach $5 or $7.27 if it can break out above previous all time highs.

RSI Momentum

Looking at the 2D Relative Strength Index gives us a very clear indication as to where market momentum currently stands. The Chainlink 2D RSI is currently trading at 82, which is a level not seen for this instrument since the previous parabolic rally in May of 2019.

These zones are highlighted by the white rectangles on the RSI. Whenever Chainlink’s relative strength rises above the 60 level, significant gains are made. The most recent example was in late 2019, which was relatively light compared to the previous rally but the overall move went from $1.50 to $3.00 for a 100% gain.

A move from the current level of $4.00 to the 1.618 Fibonacci extension at 7.25 would be a 95% move. With a trailing stop-loss strategy, the potential gain is nearly limitless as price breaks new highs.

2019 price projections using same method to derive 2020 levels.

A Tale of Two Rallies

To help support these price targets. I’ve used the same method to measure out the previous Chainlink rally from 2019. Notice how price hit the 1.618 level at $4.35 before correcting back to the levels show in the previous chart.

If the current Chainlink price action can follow suit, $7 is not unreasonable as this is the new 1.618 extension. At this point only time will tell, remember to keep your stop loss tight and always trade with caution.