Recent Price Action
Bitcoin – BTC has been unable to generate any type of sustainable rally since mid-November. Each small rally has been met with a wave of selling pressure. The short-term momentum is clearly in favor of the bears. In order to reverse the momentum, the bulls must generate a weekly close above 59,423 (Chart #1). The most likely scenario is a continuation of lower prices. The next important support level is 43,320 (Chart #2).
The critical support level on the daily chart is 39,716 (Chart #3). This number will determine the success or failure for BTC in 2022. If Bitcoin has any chance of recording a new all-time high in 2022, it must stay above 39,716 on a weekly closing basis. Will BTC drop below this critical support level? Despite the bearish price action during the past two months, it’s unlikely that BTC will generate a weekly close below 39,716.
Chart #4 displays the Accumulation/Distribution oscillator, more commonly known as the A/D oscillator. This technical indicator was developed in 1979 by Larry Williams, one of the most successful commodity traders of the past 50 years.
A/D is a momentum indicator used to measure the strength or weakness of a particular stock, commodity or cryptocurrency. Williams believed that in order to become a successful trader, it was imperative to accurately determine the underlying trend of the market. Williams developed the accumulation/distribution indicator to accomplish this objective.
During the past few years, the A/D oscillator has worked incredibly well with Bitcoin. As you can see from the chart, the oscillator accurately forecasted the 6-month low on 20 July. It also forecasted the 6-month high on 10 November. Currently, the A/D oscillator is forecasting a trading range for Bitcoin. Most likely, BTC will be stuck in a trading range for the next few weeks with a bias to the downside.
Ethereum – The short-term Ethereum chart pattern is slightly bearish. ETH has been drifting sideways-to-lower during the past several weeks. Most likely, this trend will continue throughout the month of January. At least for now, there is no reason to expect ETH to generate a substantial move any time in the near future.
A daily close above 4,253 is needed in order to flip the momentum from bearish to bullish (Chart #5). Despite the recent decline, Ethereum is in much better condition than Bitcoin from a technical perspective. ETH easily outperformed BTC in 2021. This trend will probably continue in 2022.
Let’s examine the 6-month price action of ETH in relation to the A/D oscillator. During the past six months, the oscillator has fluctuated between 2678 and 6579 (Chart #6). Currently, the A/D oscillator is fluctuating near the upper end of range @ 5594. This is a clear indication that ETH could be on the verge of experiencing a short-term decline.
Chainlink – As the popularity of smart contracts began to increase in 2017, blockchain developers discovered the need for a third-party service that connected smart contracts with the outside world for the purpose of feeding information to the smart contracts. Chainlink serves the role of collecting outside information and relaying the information to the smart contract. Chainlink is known as a blockchain oracle.
The Chainlink (LINK) ICO occurred in September 2017 @ $0.11. LINK is one of the very few tokens that has never traded below its ICO price. LINK has generated a spectacular advance over the course of the past four years. However, the token is currently in the midst of a sharp decline following its all-time high on 10 May @ 52.91. The entire crypto universe has been drifting lower during the past seven months. LINK has been no exception.
LINK is one of the few tokens that has increased in value during the past 30 days (Chart #7). Despite the recent price advance, the short-term trend remains bearish. In order to reverse the bearish momentum, LINK must generate a weekly breakout above 29.84 (Chart #8).
Over the course of the past eight months, LINK has recorded a series of higher highs (Chart #9). This is a classic sign of a bull market. If this chart pattern continues in 2022, LINK will trade above 38.24 by the end of the year. Based strictly on technical analysis, LINK appears to be one of the most bullish coins as we begin a new year.
Which Cryptocurrency Has The Most Upside Potential In 2022?
The first few trading days of 2022 have been brutal for the crypto bulls. The entire cryptocurrency universe has witnessed a continuation of the mini-bear market from late-2021. Despite the recent bearish price action, the long-term trend remains incredibly bullish. Some coins are more bullish than others. Which coin has the most upside potential in 2022?
Based strictly on technical analysis, Solana (SOL) appears to have the most bullish chart pattern as we begin a new trading year. All coins and tokens have experienced sharp declines during the past two months, including SOL. However, Solana has managed to preserve the majority of its gains from 2021. For example, during the past six months, SOL is ahead 574%, easily outperforming the majority of cryptocurrencies (Chart #10).
The critical short-term support level for Solana is 116.13 (Chart #11). As long as SOL stays above 116.13 on a weekly closing basis, the token has tremendous upside potential in 2022.
The Fibonacci target is 674.51.