Chainlink: Will the $7 support level come to the rescue once again?

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

• The momentum and structure favored the bears.
• Buyers can wait for a bullish structure break after a test of the $7 support zone.

Bitcoin found some support at the $23k level but was unable to breach the $23.6k at the time of writing. A Bitcoin rejection could drag the entire altcoin market downward. Chainlink witnessed bearish momentum in recent days.

Read Chainlink’s [LINK] Price Prediction 2023-24

Chainlink bulls also have a chance at reversing the losses of the past week. The $7 region is a strong zone of support, but a reversal would depend on BTC as well.

The sharp drop into a demand zone could spur bulls into action

Source: LINK/USDT on TradingView

On the 4-hour chart, Chainlink had a bearish structure. On higher timeframes, the charts showed LINK has traded within a range from $5.66 to $9.45 since May 2022.

The mid-point of this range lay at $7.57. The previous week, LINK bulls had managed to push the prices above the mid-range mark, but the pullback had been quick.

The RSI was pushed deep into bearish territory, and the rejection at $8.11 on 24 February saw the RSI dive back beneath the neutral 50 line.

The market structure on H4 was also bearish, and volatility was high in the past week. Overall, the momentum and near-term trend were bearish.

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

The CMF continued to move above +0.05 to show significant capital flow into the market. Another point that bulls will have picked up on is that Chainlink has plunged into a bullish order block, marked in cyan.

Moreover, the Visible Range Volume Profile showed the Point of Control lay at $7. Therefore, bulls can look to bid a descent to this level, although risk management would be extra important. A drop beneath $6.98 would break the bullish order block.

Funding rate remains bullish despite the pullback in prices

Source: Coinalyze

The 1-hour chart above showed declining Open Interest since 26 February. Even when the price briefly pushed past $7.5, market participants did not show any strong conviction.

This signaled discouraged Chainlink bulls and was an indication of bearish sentiment overall.

To counter this, the predicted funding rate sat in positive territory. This meant long positions paid funding to short positions and showed the majority were bullish. But this has been the case since mid-February and was not a sign by itself that buyers were dominant.