Chainlink price action shows a bull trap could materialize in this zone

Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.

• Chainlink noted a short-term area of interest around the $6.6 mark.
• A bounce in prices to this level and the subsequent reaction would shed light on the market sentiment and the direction of the next move.

Chainlink [LINK] has a bearish market structure in the short term. The 4-hour price chart and lower timeframes showed that it did not exhibit much volatility in the past three days. Bitcoin [BTC] could play a major role in determining the direction of the next move for LINK, and many altcoins across the crypto market.

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Realistic or not, here’s LINK’s market cap in BTC terms

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Chainlink witnessed a bearish structure on the 1-day timeframe as well, after the losses it sustained early in August. To flip this bias, the price would need to form a higher low and a higher high, which could take time to develop.

The short-term consolidation just below the $6.6 mark meant LINK could be attracted northward

The 1-hour chart that an imbalance (white) was present that extended to $6.5. In the 72 hours before press time, Chainlink traded between $6.13 and $6.3 and saw little volatility within this tight range.

The RSI managed to climb above neutral 50, showing some bullish momentum in the short term. Yet, the structure on the H1 chart did not favor bulls. The OBV also noted slight gains, but nothing to suggest a breakout past $6.5 was brewing.

The $6.56-$6.62 zone represented a near-term consolidation zone on the way down for LINK. Hence, a retest of this zone would likely present a selling opportunity for lower-timeframe traders. The $6.85 level could see LINK rejected as well. Yet, gains for the token beyond that level would indicate the bulls were beginning to take control.

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The lack of volatility saw speculator sentiment remain bearish over the weekend

Weekend price action tends to be boring in general, and futures market participants might not enter in large numbers. Chainlink’s price action in the past three days did not inspire bullish confidence, although the spot CVD crept higher by a small margin.

The lack of a significant change in the Open Interest meant traders were waiting for momentum and lacked conviction in either direction at the moment. Short-sellers can wait for a move to $6.6 or $6.85 to look for entries in the coming days.