Jonathan Morgan
Independent Analyst
- 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.
Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
Recommended Content
Editors’ Picks
MANTA suffers 4% pullback after unlocking tokens worth $40 million
Manta Network (MANTA) unlocked over 8% of its circulating supply on Thursday. The unlocked tokens were airdropped and distributed in public sale, according to data from Tokenunlocks.
XRP struggles to recover as lingering Ripple lawsuit could reach Supreme Court, former SEC litigator says
The SEC vs. Ripple potential showdown at the Supreme Court is likely, says former SEC litigator Ladan Stewart. XRP Ledger calls developers, businesses and investors to build on the blockchain, extending Apex 2024 registration until April 30.
Bitcoin Layer 2 Merlin chain TVL climbs 20%, defying broad market correction
Merlin chain’s TVL added 20% this week, and crossed $800 million on Thursday. Bitcoin Layer 2 assets noted double-digit losses in the past week. Stacks, Elastos, SatoshiVM, BVM are hit by a correction as Bitcoin hovers around $61,000.
If Bitcoin restarts bull run, these altcoins are likely to explode Premium
If Bitcoin’s consolidation ends and the bull run resumes, altcoins are likely going to trigger a massive rally. Last cycle’s hot tokens like SOL, AVAX, WIF, ONDO, etc., could see renewed enthusiasm.
Bitcoin: BTC’s rangebound movement leaves traders confused
Bitcoin (BTC) price has been hovering around the $70,000 psychological level for a few weeks, resulting in a rangebound movement. This development could lead to a massive liquidation on either side before a directional move is established.