After a nasty selloff and long consolidation, the concurrency market in general appears to be finding some support. One asset in particular which has well outperformed Bitcoin in the past year might be giving patient buyers another chance to get in on the next move.
Looking at the Chainlink/Bitcoin daily chart, the 200EMA has proven to be a reliable support indicator. Price data over the past year shows the LINK/BTC pair has traded down to, and bounced off, the 200EMA 3 times since May 2019.
Each time LINK/BTC has come to this level, a strong rally has followed. The most recent was in early 2020 when the token outperformed Bitcoin by over 100%. A noticeable volume increase has also accompanied each re-test of the 200 EMA level.
It appears that the most recent sell-off following the initial shock Coronavirus may be coming to a close, the candles are getting smaller as price approaches the 200 EMA which indicates a volatility squeeze could be forming.
All eyes are on the 200EMA for now, it wouldn’t be out of the ordinary for price to dip below to shake out the weak longs. Be on the lookout for an increase in volume at this level as buyers become more interested.
Is it possible for history to repeat itself? Chainlink has been a great performer for 2019 and so far 2020 has been showing strong signs of continuation.
The 200EMA is often used as a “filter” to determine whether a trend is up or down. When price is trading above the 200EMA the market is said to have a bullish bias. An increase of volume indicates that traders have a strong interest at the level of increase.