- LINKUSD has consolidated for more than six months
- A bearish flag might form
- Bulls and bears should wait for a breakout before acting
Chainlink provides data to smart contracts on the blockchain, and LINK/USD is in a long-term consolidation following an abrupt selloff. Both bulls and bears must have lost their patience, but such consolidations are interesting to trade because they usually appear ahead of another big market move.
Unlike other cryptocurrencies, LINK did not make new lower lows in the second half of 2022. Instead, buyers appeared on every attempt to trade below $6.
So that is a bullish accomplishment. On the flip side, every bounce was not strong enough to break the previous lower high. Therefore, bears appear to still be in control.
2023 brought a much-needed rally to the cryptocurrency market. Bitcoin, in particular, surged, and its bullish price action translated into bullish movements on other coins too.
Indeed, LINK/USD rallied from $6 to $8, only to meet new sellers there. In other words, the price action evolves inside a horizontal channel, and until a breakout, the chances are that it will go nowhere, only frustrating both bulls and bears.
Does the horizontal channel suggest anything?
Whenever a horizontal consolidation appears on a chart, the technical trader should look on the left side for trending conditions. In this case, a bearish trend is present, meaning that the horizontal consolidation might be part of a bearish flag pattern.
That is one scenario.
Another is that the market is simply carving a bottom. But for that to be true, bulls should wait for the price to break above $9.5, and ideally above $10, before going long.
The measured move of a horizontal channel is the channel’s width. So, just look for a breakout in either direction and target the measured move.