As Chainlink tumbles below $7.35, what will be the next bearish target
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
- Chainlink showed bearish price action and could offer a short setup.
- The weakness of Bitcoin in recent days could aid the push from sellers.
Chainlink [LINK] had a strong bullish impulse move on 20 July, breaking past a previous local high. However, the price ran into a higher timeframe resistance at the $8.2-$8.8 area. The start of August saw the bulls fight hard to hold on to the $7.4 support zone.
Read Chainlink’s [LINK] Price Prediction 2023-24
The wave of selling in the past 24 hours forced the buyers back. It also showed that another move downward was imminent. Where should short traders look to enter?
The bullish order block was flipped bearish, paving the way for LINK to descend furtherThe price action of Chainlink showed the previous higher high from mid-July was at $7.34, marked in green. The pump to $8.46 and subsequent retracement saw this level serve as support. Moreover, there was a bullish order block on the H4 chart at this level.
This area was defended over the past eight days but the bearish intent has intensified. The bounce from $7.45 that began on 25 July was unable to push past the retracement’s lower high at $8.1, marked in dotted white.
The recent drop below the order block meant that a retest would be greeted with eager sellers. Hence, LINK traders can look to enter the $7.4 region if we get a retest, with a stop-loss above the recent lower high at $7.71. The RSI showed strong bearish momentum and the OBV has been in a downtrend since 23 July.
The decline in spot demand reinforced the bearish ideaThe Open Interest was flat for large amounts of time since 27 July. It was interspersed with periods of a sudden drop, which happened during a drop in LINK prices. This signaled bearish sentiment.
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The steady downtrend on the spot CVD chart was another sign that LINK bears have been in control for a while. The short-term outlook was bearish, and traders can look to ride the momentum further south.