Crypto Update: Chainlink Shows Parabolic Potential
The Chainlink/Bitcoin pair (LINK/BTC) came off lows of 2,276 satoshis on July 24, 2018. At that price level, the market was down by over 76% from the 2018 peak of 9,850 satoshis. Though LINK/BTC suffered immense losses this year, its recovery over the last few months has been more than impressive. It is up by over 222% from this year’s low and is showing no signs of slowing down.
In this article, we reveal why we believe LINK/BTC has the potential to go parabolic.
Strong Trend Reversal
For those who are not familiar with the term, a parabolic market is one that experiences an exponential rise in value. It moves up rapidly and ignores overheated signals. If you can spot a parabolic market, you have an opportunity to earn serious gains.
Now that we provided the definition, let’s go back to Chainlink.
LINK/BTC has breached resistance of 6,200 satoshis on October 23. This triggered the breakout from the large inverse head and shoulders reversal pattern on the daily chart. The breakout looks really strong. On that day, the market generated volume that’s over 490% of its daily average. Pushed by heavy volume, LINK/BTC rallied to as high as 7,704 satoshis today, October 31.
Daily chart of LINK/BTC
This was a strong statement from bulls. Technical indicators show that they are flexing their muscles. The RSI is on a strong uptrend as it moves within an ascending channel. The continuous development of higher highs and higher lows reveals a rapidly growing bullish momentum. This is one of the reasons why we believe LINK/BTC may enter a parabolic state soon.
Bullish Pattern on the Weekly Chart
With the breakout from the inverse head and shoulders pattern on the daily chart, we expect LINK/BTC to pull back for some time to allow for profit taking. The market must create a new base at 6,200 satoshis to keep its uptrend healthy. However, those who will be giving up their positions now might miss out on something big. We believe that the recent breakout is just the beginning.
Once the correction is over, LINK/BTC will likely go on a bullish rampage and take out the market’s heaviest resistance of 7,800 satoshis. If and when it does happen, Chainlink will break out of a large cup and handle structure on the weekly chart. It is at this point when Chainlink has the highest potential to go parabolic.
Weekly chart of LINK/BTC
In addition, we can see the weekly RSI starting to take the shape of a parabola. It is climbing so fast with shallow dips. As the RSI measures bullish momentum, many traders believe that it precedes price action. In other words, price follows the movement of the RSI. If that’s the case, then we may see LINK/BTC turn parabolic soon.
LINK/BTC is up by over 222% from the bottom and it is showing no signs of stopping its ascent. It recently broke out of an inverse head and shoulders pattern on the daily chart. On top of that, the weekly chart shows that it is threatening to break out of a cup and handle pattern. These signs tell us that LINK/BTC may enter a parabolic state in the near future.
NOTE: a satoshi is the smallest unit of Bitcoin, which equals to 0.00000001 BTC.
Featured image courtesy of Shutterstock.