Chainlink presents buy opportunity before LINK spikes to $30
|- Chainlink price experiences deep pullback, giving buyers another discount.
- A bullish Point and Figure setup presents a low risk, high reward trade possibility.
- Downside risks remain but should be limited.
Chainlink price has been quite bearish during the Tuesday trading session. LINK has moved lower by nearly 12% at one point during the day. However, the pullback was warranted as Chainlink had gained over 41% from the December 15 swing low.
Chainlink price pulls back from monster rally, giving buyers a re-entry opportunity
Chainlink price remains very bullish despite the current down drive. On Chainlink’s $0.50/3-box reversal Point and Figure chart, the prior X-column represented a 29% increase after breaking out above a triple-top. The current pattern was just shy of creating a Spike Pattern; instead, it has developed a Pole Pattern.
The entry rule on a Pole Pattern that has made its retracement is to enter on the 3-box reversal with a 4-box stop loss. At the time of publication, the hypothetical long setup for Chainlink price is a buy stop order at $22.50, a stop loss at $20.50, and a profit target at $35.00. This trade setup provides a 6.5:1 reward for the risk trade setup.
However, be aware that the current O-column can continue to move lower. That means the hypothetical buy stop for Chainlink price would also move lower – the 4-box stop loss and profit target remain the same. A two to three-box trailing stop would help protect any implied profit post entry.
For example, if the current O-column were to move lower by five boxes to $18.00, the hypothetical buy stop entry would be at $19.50 and the stop loss at $17.50 while the profit target remains at $35.00.
LINK/USDT $0.50/3-box Reversal Point and Figure Chart
Due to the nature of this Point and Figure pattern for Chainlink price, there is no invalidation point for this pattern. Therefore, the hypothetical long setup remains on the 3-box reversal no matter how low the current O-column moves.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.