Hello and welcome to another update on LINK. Today, the crypto sector is relatively quiet, with some weak upside reactions and promising movements, but nothing too exciting after the recent strong selloff. Let's dive into the LINK chart and explore the current scenario.
Key Support Level Reaction
The scenario remains unchanged, but the price has reacted to the crucial 38.2% retracement level, one of the key Fibonacci support levels on the chart.
This reaction was expected as these support levels typically generate at least a temporary bounce, which we observed at $12.76. This level has shown multiple temporary reversals, emphasizing its importance.
Structural and Fibonacci Support
The $12.76 level is not only significant due to Fibonacci retracement but also because of the previous swing low support from January 8th. This convergence of Fibonacci and structural support makes it a critical area to watch.
Initially, we saw a three-wave move down, which raised questions about whether the low was already in. However, for a confirmed bottom in wave two, we needed a five-wave pattern to the upside, which did not materialize.
Wave Structure Analysis
The initial rally only created three waves, indicating a larger WXY structure instead of the required five-wave pattern. Here's a breakdown of the possible wave structure:
- Wave W: Three waves down (ABC)
- Wave X: Three waves up (ABC)
- Wave Y: Currently unfolding, with an ABC pattern likely
B-Wave Scenarios
The key focus now is on how the B-wave of Wave Y is unfolding. There are two main scenarios:
- Normal Flat Structure (ABC): In this case, the B-wave can form an ABC pattern but may not break above the 29th May high.
- Triangle Pattern (ABCDE): If the B-wave unfolds as a triangle, it would consist of five waves (ABCDE). To keep this count valid, the price needs to stay below $4.80, forming lower highs and higher lows.
Current Observations
The price broke above the initial trend line, indicating the potential unfolding of a larger B-wave. However, we need to monitor further developments to confirm this pattern. If the triangle pattern is valid, it suggests a series of lower highs and higher lows.
Possible Head and Shoulders Pattern
There's also a potential larger Head and Shoulders pattern forming, which could drop the price deeper into the yellow support zone. This zone is crucial for finding a reliable bottoming structure, which we currently lack.
Conclusion: Flexibility is Key
In summary, while we are observing some promising movements, the overall structure remains uncertain. It's essential to stay flexible and monitor key levels, such as $12.76 and $22.80, for significant developments. This structure can shift, so keeping an eye on these support and resistance levels will help navigate the choppy market.
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