How far can LINK crash go when the parabola starts getting extreme?

LINK’s bullish momentum stalled at $ 20, sending the asset down as much as 25% in two days. After reaching over 5,000% in profits in the past two years, profit-taking may just be the beginning. Now that LINK has started to fall, how deep can the correction be?

LINK’s unstoppable rally coming to an end?

The cryptocurrency market hasn’t been like that since Chainlink got into the game. This altcoin has gone from little known, to almost flipping Ripple out of the top three top-ranked assets alongside Bitcoin and Ethereum.

The trend of decentralized finance is getting hotter and hotter, and the uptrend of decentralized oracle has been recorded in a record book. In just the past two years, wealth has grown by more than 5,000%.

Stories of early investors retreating from the unstoppable rally are pervasive. But as investors have learned from the past, what goes up, must eventually come down.

Assets cannot move in a straight line forever, although LINK did its best to put an end to that theory. After breaking recent all-time highs in early July, LINK went into full-price discovery mode, reaching as high as $ 20 per token at its peak.

The parabolic rally from July 1 peaked locally, giving investors up to 340% ROI. But with such a substantial return and an adjustment began, profit-taking can seriously increase with many investors making a profit.

But how deep can LINK be adjusted?

LINk 2

Weekly LINKUSD: Parabol, Wedge, S / R | Source: TradingView

Will LINK/USD correct deeply, or will the bulls push higher?

After rising from $ 4, Chainlink rarely comes back to retest this level. With the parabolic curve (in blue) almost completely broken and very few runways left, signs are beginning to negative for LINK/USD.

In addition to the parabolic breakout, an ascending wedge pattern is likely to form on the weekly timeframe, are shown with red dotted lines.

The two immediate weekly support levels are located around $ 7, where LINK pauses for a moment before doing another run again and at $ 4 where the parabola starts getting extreme.

While $ 4 might seem like an overly bearish target for LINK, but the asset peaked at $ 20 and could drop to $ 4. Bitcoin’s parabola was breaking from $20,000 resulted in a fall to $3,200 when it was all said and done, further than what’s estimated for LINK’s correction.

Data doesn’t lie, and while LINK’s story has certainly been different for the past two years, even experienced chartists like Peter Brandt regularly call for a drop of 80% or more after the end of a parabolic rally.

LINk 3

Weekly LINKUSD: TD, Bollinger Bands, ADX, RSI | Source: TradingView

Technical indicators also clearly show that LINKUSD is too hot and too excessive to easily correct.

The TD Sequential indicator is above a sell 13 setup, showing extremely severe trend exhaustion on the weekly timeframe. There is also a major bearish divergence over a year of price action on the RSI.

The Average Directional Index (ADX) shows extremely high trend intensity numbers; however, this could also signal an imminent or ongoing reversal. The ADX also displays a green Directional Movement Index line that crosses the ADX itself.

Last time there was a similar crossover, the price plummeted 66%. Another 66% drop will bring LINK/USD to the first listed target at around $ 7, while a full 80% drop will bring the price closer to $ 4.

Finally, the LINK weekly candles are active to close back inside the Bollinger Bands after a breakout and close above. In other cases, it leads to a sharp drop.

However, Chainlink’s most loyal investor base has not been affected by the recent drop in price.

According to data from analytics platform Santiment, long-term hodlers are continuing to move their tokens out of exchanges and into online storage.

“LINK experienced a pretty unprecedented drop, independent from the rest of the crypto markets. Notable is the 6-month drop of the percentage of Chainlink tokens on exchanges, declining from 8.6% to 6.9% during this timeframe”.

Unless the synthetic cryptocurrency market continues trending lower in the mid-term, it is more likely that LINK’s continued decline will be temporary.

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