Chainlink (LINK) was among a subset of cryptocurrencies that recently hit lower lows on daily time frames. A lower low is an indication of a continued downtrend and weakness at support.
At higher time frames, however, engineering technicians tell a completely different story — a story of potential strength building. In fact, a signal has emerged that led to a 14,000% rally in LINKUSD last time.
Bullish Confluence With High Time Frame Points To Surprising Recovery Of Chainlink
Chainlink (LINKUSD) remains more than 80% lower than its former all-time highs. Even worse, after a full year of bear market lows, the range temporarily disintegrated and formed a lower low on the daily charts.
In technical analysis, higher time frames create more dominant signals. And while there was a lower daily low, the monthly time frame failed to reach a lower low on a closing basis.
In addition to a possible range drift and retrace, the monthly candlestick formed a dragonfly doji. a dragonfly doji In Japanese candlestick analysis, represents a possible bullish reversal pattern.
Within even shorter time frames, Chainlink was among a slew of altcoins, they formed another bullish Japanese candlestick reversal pattern on weekly time frames called the morning star pattern.
Will a similar trend follow? | LINKUSD on TradingView.com
A CONNECTION WITH THE PAST: Oversold Stochastic No More
If reclaiming a bullish range on low timeframes, and a few higher timeframe Japanese candlestick reversals aren’t confluence enough for you, there’s more.
The one-month stochastic has moved out of oversold territory for the first time since late 2021. The indicator was oversold throughout 2022 and midway through 2023.
Before that, the last time Chainlink exited oversold conditions was in early 2019, before going on a run of over 14,000%. The signal is back and in line with the possible reversal patterns from above.
Meanwhile, Bitcoin and other cryptocurrencies have seen much more recovery by comparison. The broader trend reversing more clearly could remove any doubt about LINK, allowing the altcoin to return to its former glory days.
This chart originally appeared in Number #10 of CoinChartist (VIP). Sign up for a free plan.