Cryptocurrency analyst and trader Ali Martinez has highlighted a dangerous head-and-shoulders formation on the Chainlink (LINK) chart.
According to Martinez, if this formation is confirmed, the LINK price could drop to $14.
LINK is currently trading at $23.36. However, the head and shoulders formation seen on the chart is giving a significant bearish signal. “Chainlink could drop to $14 if this head and shoulders formation is confirmed!” Martinez wrote on Twitter.
What is the Head and Shoulders Formation?
The head and shoulders pattern is a technical analysis pattern that is usually a sign of a downtrend. The formation of the pattern is completed when the price makes three different peaks, called the “left shoulder,” “head,” and “right shoulder,” respectively. If the price breaks the support level, called the neckline of the pattern, the downtrend is confirmed.
The neckline on the LINK chart is around $20. If the price breaks this level to the downside, LINK could target $14, according to Martinez. This would mean a drop of about 34 percent compared to the current price.
Stay tuned.