Chainlink : Great example of a Bull Pennant PatternHello traders! Just a quick analysis and a bit of educational information on LINK (Chainlink).
The weekly chart is looking quite strong and with many altcoins including Ethereum showing strong uptrends we are definately in the correct enviroment for this type of chart pattern to have a high probability of playing out.
Bull Pennants are a little different to Bull Flags but are almost identical in appearance and are traded basically the same.
The most important factor in identifying any flag or pennant pattern is the clear "staff" or "flagpole"; there should be a straight run upwards leading up to the pattern or it is not a valid pattern.
After the straight run upward price starts to Zig Zag between two converging trendlines forming a tight wedge (it can be slanted, or even symmetrical) until the price "breaks out" above the upper trendline signifying a possible continuation in trend upwards.
Bull Flags and Bull Pennants have the highest success rate out of any pattern and work extremely well when paired with long term support & resistance areas. Enter at the invalidation point of the pattern (A), second entry on the bullish retest (B). Pennants that are “tighter” have higher success rates, look for patterns forming on top of long term resistances (not below) to increase probability of success also. Pattern height is measured and added to swing low before breakout for possible target.
Sometimes large size traders can generate liquidity by faking out under the pattern support as we can see on this current example with ADA. The liqudity generated by triggering stop losses underneath the pattern can fill large position sizes for whales and is a good indicator for a long once the price confirms support back inside the pennant .
Some key points:
• PRICE MUST MOVE STRAIGHT UPBEFOREHAND
• MIN 2 Touches each side on almost symmetrical looking wedge
• HIGH SUCCESS RATE
• BEST ENTRY IS often when price fakes out under support
• Pattern height is measured and added to swing low before breakout for possible target
Chainlink (LINK) is an Ethereum-based token powering the network of decentralized oracles. The Chainlink network allows uploading information to the blockchain from any third-party services. It ensures the functioning of smart contracts that rely on external data. It is looking to have a strong year in 2021 along with other defi related projects, many are currently bottoming out.
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