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.

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Read Chainlink’s [LINK] Price Prediction

2023-24

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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 bearish

As 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.

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

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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.