Several altcoins have been showing strength in the past week with some of them seeing surges of more than 100%. One of them is Chainlink (LINK), whose price has risen 156% since Black Thursday, while Ether (ETH) price also rallied 135%.
The main question becomes whether altcoins are back in the game, or whether it’s just a dead cat bounce once again.
Crypto market daily performance. Source: Coin360
Ethereum showing strength as it’s facing key $200 resistance
ETH has been trending upwards since the big crash on March 12, when Ether dropped by more than 50% in value as the chart is showing.
ETH USDT 4-hour chart. Source: TradingView
The current uptrend is clear, during which every previous resistance has turned into support, resulting in an increase in price. The same support/resistance flip is currently occurring with the $190 level as this is now acting as support.
As long as the $190 level holds as support, further surges of the price are likely with the next potential targets at $210-214 and $227-235.
ETH USDT 1-day chart. Source: TradingView
Could Ethereum still test lower levels, before surging more? Yes, definitely.
A trend like these usually ends up with retests of lower levels before continuation. However, the bounce is significantly different than any other previous surges during the latter part of 2019, in which every previous support immediately turned into resistance.
In other words, buyers are stepping in as the BTC pair of Ether is also showing strength in its movements.
The primary resistances are currently found at $210-214 and $226-235, after which a correction should not come as a surprise. If this happens, the big support levels are $167, $150 and $122.
Ether facing significant resistance in BTC pair
ETH BTC 1-day chart. Source: TradingView
The BTC pair of ETH remarkably found support at the 0.020 sats level, which led to a breakout of the price towards 0.026 sats.
Since then, the price has been hovering above the key support level at 0.0246 sats. As long as that level remains support, further upwards momentum is likely to test the next level of resistance between 0.0268-0.0273 sats.
The resistance between 0.0268-0.0273 sats is a crucial one as a further breakout above that level can warrant continuation towards 0.03 sats and possibly 0.036 sats. Once this occurs, further surges from altcoins can be expected, as the majority of the altcoins follow Ether, particularly since many altcoins are built on the Ethereum blockchain.
However, losing the 0.0246 sats level as support would warrant further drops and pain for altcoins with 0.0229 and 0.022 becoming the key levels to watch.
Is Chainlink’s price ready for a correction?
LINK USDT 1-day chart. Source: TradingView
The USDT chart of LINK is showing a massive surge since the crash as well with the price rallying by 156% to $3.90. Does that mean that Chainlink will continue to rally without corrections? Probably not.
The price of Chainlink has already been rejected by the resistance between $3.85-4, which is a natural and healthy move to see.
However, holding the $3.48 level for support is a must. Dropping beneath this support area would warrant further downwards momentum with further tests of $2.90 and possibly even $2.44 on the table.
LINK USDT 4-hour chart. Source: TradingView
The 4-hour chart of LINK is showing that there’s a clear breakdown of a rising wedge structure. The resistance was too strong, which led to a breakdown of this structure and tests of lower levels for support.
As the chart is also showing, LINK is approaching a do or die level, namely $3.48 level, as that’s the previous top and resistance.
Once that support can be held, a further test of the highs around $3.85-3.99 is likely. However, losing the support level leads to further downward tests of $3.23 and most likely the $2.90 level.
LINK/BTC testing support
LINK BTC 12-hour chart. Source: TradingView
The 12-hour chart of the BTC pair of LINK is similarly showing a clear breakdown after failing to break the 0.00052500 sats resistance. Bearish divergence, including decreasing volume, was signaling for this breakdown to occur.
However, this breakdown is approaching the first crucial level of support. The 0.00045500-0.00046000 sats level is also a must-hold level for Chainlink. Then, for the rally to continue, the next level to break will be 0.00049000 if LINK price is to make new highs.
If the price of Chainlink fails to hold the 0.00045500 sats level as support, further downwards momentum is expected with 0.00043500 and 0.00040500 as the first levels to watch for traders.
LINK BTC 2-hour chart. Source: TradingView
The most likely scenario for a potential bounce and short-term relief would be a structure as drawn in the chart. The RSI indicator is showing that the price is due for a bounce upwards confluent with the support area.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of CryptoNewspeople. Every investment and trading move involves risk. You should conduct your own research when making a decision.