Chainlink: Do bulls have to look to enter?

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

• While LINK’s structure was bearish, it was likely a pullback before moving higher again.
• The $6.7 zone is critical on the higher timeframe charts.

Chain link [LINK] since June 20, prices have been rising. The Bulls forced a breakout past the local resistance area at $5.5 and hit it again on June 23 as support, an upward trend that lasted into early July.

Read Chainlinks [LINK] Price Forecast 2023-24

For the past two days, LINK has experienced a small price drop. Even more concerning, Bitcoin [BTC] couldn’t stay above $31k either. Does this mean the start of a price drop?

Chainlink retests $6.2 support region, but will the bulls resume the rally?

Source: LINK/USDT on TradingView

LINK has broken below a recent higher low of $6.34. In addition, the market structure is bearish in the short term. But based on the big move up that happened in late June, a series of Fibonacci retracement levels were plotted.

They showed that the 50% level was at $6.2 and merged with the bearish order block at $6.3 from the beginning of June. A retest of this region would likely yield a bullish response as the bearish OB has flipped to a bullish breaker.

Bitcoin’s inability to hold the $30.8k level meant that Chainlink could take losses alongside BTC.

The RSI dipped below the neutral 50 on the 4-hour chart to indicate that bearish momentum has begun to build. Meanwhile, the OBV remained mostly flat. This indicated a lack of strong buying pressure, which is necessary to start a rally.

Therefore, buyers in the $6.2-$6.3 region can seize the opportunity, but should be prepared to cut their losses early if Bitcoin continues to fall.

Short-term data from Coinalyze showed that sentiment was turning bearish

Source: Coin analysis

When Chainlink was rejected on July 4 from $6.69, the Open Interest started to go lower. In the hours leading up to the time of writing, LINK fell further below $6.5. This led to another small decline in the OI, highlighting short-term bearish sentiment.

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

The spot CVD also fell, demonstrating increasing selling pressure. Nevertheless, the financing rate remained positive.

Putting all the evidence together showed that the $6.2 region may be a place where LINK bulls push back the bears. However, momentum in the lower time frame has been on the bearish side and buyers should exercise caution.