Chainlink [LINK] traders can profitably navigate through this pattern
Chainlink’s [LINK] previous revival tested the $6.7-level before giving into the near-term bearish inclinations. As a result, LINK devalued in a down-channel (yellow) toward its multi-weekly lows in the $5.9 region.
While the buyers find a break above the near-term EMAs, the immediate outlook for the alt favored the bulls. But looking at the rejection of higher prices at the $6.3-mark, LINK could continue its sluggish phase in the coming sessions. At press time, LINK was trading at $6.234, up by 1.18% in the last 24 hours.
LINK 4-hour Chart
After a reversal from the $6.7 ceiling, LINK’s descent transposed into a descending channel setup. Sellers forced an approximate 16% drop from 8 July as the alt rushed south toward its monthly low on 13 July.
The last two days marked a decent buying attempt while the alt broke above its reversal pattern. Despite breaking the bonds of the Point of Control (POC, red) alongside the 20/50 EMA, LINK struggled to cross the $6.3-mark.
While the recent bullish engulfing candlestick reflected an uptick in buying pressure, buyers could aim to reclaim vital price levels. Any close above the immediate resistance could affirm the chances of a near-term buying spree before a strong reversal.
Any drop below the 20 EMA could expose the alt to a further downside toward the $5.9-$6 range. Considering the tussle between the buyers and sellers in the $6-zone, the alt would likely see a low volatility phase near the POC.
The Relative Strength Index (RSI) did breach the boundaries of its equilibrium over the last day. But the reversal from the 55-mark has rather kept the index in the neutral zone.
The Volume Oscillator has been on a plunge during LINK’s recent peaks. Thus, revealing a bearish divergence with the price. Also, the ADX displayed a substantially weak directional trend for the alt.
In light of the rejection of prices at the $6.3-mark and the bearish divergence on the Volume Oscillator, LINK could see a near-term bearish pull. The targets would remain the same as above.
Any bearish invalidations could see a relatively sluggish phase near the POC zone. Finally, an overall market sentiment analysis becomes vital to complement the technical factors to make a profitable move.