Chainlink: Should bulls look to enter?
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
- While the structure of LINK was bearish, it was likely a pullback before another move higher.
- The $6.7 zone is critical on the higher timeframe charts.
Chainlink [LINK] prices have been rising since 20 June. The bulls forced a breakout past the local resistance region at $5.5 and retested it as support on 23 June, initiating an uptrend that lasted until early July.
Read Chainlink’s [LINK] Price Prediction 2023-24
Over the past two days, LINK has suffered a minor drop in prices. More worryingly, Bitcoin [BTC] could not stay above the $31k mark as well. Does this represent the beginning of a slump in prices?
Chainlink retests $6.2 region of support, but will bulls resume the rally?LINK has broken beneath a recent higher low at $6.34. In doing so, the short-term market structure is bearish. Yet, based on the large upward swing that occurred late in June, a set of Fibonacci retracement levels was plotted.
They showed that the 50% level was at $6.2 and had confluence with the bearish order block at $6.3 from early June. A retest of this region would likely see a bullish reaction as the bearish OB has been flipped to a bullish breaker.
Bitcoin’s inability to hold on to the $30.8k level meant Chainlink could suffer losses alongside BTC.
The RSI dipped below neutral 50 on the 4-hour chart to indicate bearish momentum was beginning to take hold. Meanwhile, the OBV remained largely flat. This indicated a lack of strong buying pressure, which is necessary to initiate a rally.
Hence, LINK buyers in the $6.2-$6.3 region can seize the opportunity, but must be prepared to cut their losses early if Bitcoin continues to slump.
Short-term Coinalyze data showed sentiment has begun to flip bearishAs Chainlink faced a rejection from the $6.69 mark on 4 July, the Open Interest began to slide lower. In the hours before the time of writing, LINK descended further below $6.5. This prompted another small drop in the OI, highlighting bearish sentiment in the short term.
Realistic or not, here’s LINK’s market cap in BTC’s terms
The spot CVD was also in decline, showing the rising sell pressure. Yet, the funding rate remained positive.
Taking all the evidence together, it showed that the $6.2 region can be a place where LINK bulls force back the bears. Yet, lower timeframe momentum was on bearish side, and buyers must exercise caution.