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With a bearish pennant in the daily chart, the recovery rally in Chainlink teases a massive trend reversal. Will this reversal lead to a breakout run to $14?
As Bitcoin reclaims the $61,000 level, the broader market sentiment jumps, with the Fear and Greed Index up by 7%. Amid the top performers in the recovering market, Chainlink projects a buy low, sell high possibility with a breakout at the cusp. Will this breakout run in Chainlink prices skyrocket for a 40% rally this week?
Engulfing Candle in Chainlink hints at a Breakout Run
In the daily chart, Chainlink witnesses a shift in underlying sentiment, showing signs of a bullish recovery. After a massive 56% correction, the Chainlink price fell from $21.71 to $9.48, below the $10 psychological mark.
However, the recent recovery run has reclaimed the $10 level, with Chainlink now trading at $10.508.
In the short term, LINK’s price action forms a triangle pattern, which leads to a bearish pennant with the prevailing downtrend. Despite this, the ongoing recovery in Chainlink hints at a potential bullish breakout.
Over the past 24 hours, Chainlink has seen a 3.76% price increase, forming a bullish engulfing candle. This price action completes a morning star pattern within the triangle, challenging the overhead trendline.
The MACD indicator on the daily chart shows a bullish crossover, while the RSI line is trending upward, approaching the 50% mark.
The Early Signals in 4-hour Chart
A closer look at the 4-hour chart reveals that LINK is poised to break above the overhead trendline with a rounding bottom reversal. Chainlink has found consistent support at the $10 level, forming four consecutive bullish candles.
Additionally, LINK has surpassed the 20 and 50 EMAs on the 4-hour chart, hinting at a potential EMA crossover.
According to the Fibonacci retracement levels drawn from the correction phase in early August, LINK is heading toward the 50% Fibonacci level at $10.85. A bullish breakout at this critical point could strengthen market sentiment.
Looking ahead, if the bullish trend continues, LINK could challenge the high of $13.93, last seen on July 29. Based on the 1.618 Fibonacci level, a less optimistic target places the price at $8.859 for a correction.