The Chainlink [LINK] ETF news and spot buyer dominance last week spurred a 15% price hike in under six days last week. This bounce saw LINK climb to $13.57, but it was forced to pull back on the charts soon after.
All those gains were wiped out, and LINK dropped to a low of $11.74 after the market-wide dip on Monday. However, Chainlink has since reacted positively once again, posting a 24.4% rally since that low to trade at $14.61 at the time of writing.
Understanding the long and short-term LINK trends
Source: LINK/USDT on TradingView
On the 1-day chart, the internal structure shifted bullishly when LINK managed to surpass the $13.57 lower high. However, the overarching trend remained bearish.
There was a supply zone from $15-$16.6 that must be converted to support to keep LINK’s rally going. To the south, key long-term supports were $11.74 and $10.94.
The OBV has slowly trended higher, but it was not explosive buying pressure. Therefore, traders should not bet on an immediate rally beyond $16.6. The RSI underlined a momentum shift towards bullishness with a reading of 54.
Source: LINK/USDT on TradingView
The 1-hour chart highlighted strong bullish momentum on both the RSI and the price action. The RSI also exhibited a bearish divergence with the price – Indicating that a minor pullback may be incoming.
This pullback could take the price to the $14.2-local support.
Source: CoinGlass
The liquidation heatmap revealed that LINK swept the key magnetic zones from $13.6 to $15. There were more short liquidations overhead, but they were not as densely cluttered.
The bullish LINK scenario
The small liquidity pockets overhead could still drag the price higher. The OBV’s trend shift needs to strengthen to boost Chainlink’s chances of a rally to $16-$16.6 and potentially, higher.
This would initiate a bullish trend, especially once $16.6 is flipped to support.
Traders’ call to action, or rather, inaction
The more likely scenario is a range formation around $14.2-$15.4. These levels are not exact, based on the information at hand. The buying pressure, nor the trading volume, has been overwhelming on the way up.
The short-term bearish divergence also meant we should not expect an immediate breakout past $16.6.
Finally, the lack of strong magnetic zones nearby, especially after some dense liquidity pockets were attacked in recent days, meant the market might need time to make its next move. Therefore, LINK traders need to position themselves accordingly and expect a range.
Final Thoughts
- Chainlink retraced all of its previous week’s gains during Monday’s price dip, but has rallied by nearly 30% since.
- Even though the current momentum was bullish, LINK traders would likely see a short-term range formation in the coming days.
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion
Source: https://ambcrypto.com/chainlink-recovers-by-30-after-mondays-drop-but-heres-why-upside-will-be-capped/
