Chainlink heads to key support level – is a rebound likely?

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

• Bullish momentum faltered at a bearish order block.
• Shorts’ 53.89% advantage on the long/short ratio highlighted bearish market sentiment.

Chainlink’s [LINK] foray to the $8 price zone was short-lived, as a deep retracement reversed a substantial part of the bullish gains. A 12% price drop from the $8 price zone has set LINK on a path to retest the critical $7.2 support level.

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

With Chainlink mirroring Bitcoin’s [BTC] bearish activity, the defense of the $7.2 support level will be key for bulls to maintain the uptrend.

Bearish order block halts bullish uptrend

Source: LINK/USDT on Trading View

Chainlink’s bullish run in July saw the altcoin record massive gains. The 47% pump took it from the $5.9 support level to touching distance from its year high. However, the bearish order block (OB) between the $8.1 and $8.7 resistance levels stood in the way of more bullish gains.

The sharp drop in prices highlighted selling pressure at the bearish OB. Despite the retracement, the 12-hour timeframe showed that LINK remained on an upward trend. With price approaching the $7.2 support, a break in that level could signal a bearish intent to flip the market structure.

The bearish crossover on the Moving Average Convergence Divergence (MACD) indicator revealed growing bearish strength. This was also reflected in the Relative Strength Index (RSI) dipping from the overbought zone to the neutral 50 mark.

Taken together, they showed growing selling pressure and waning buying demand.

A retest of the $7.2 offers buyers a strong base for a rebound back to the $8 – $8.5 price level. However, Bitcoin’s lack of recovery could see bears gain more ground with a break of the $7.2 support.

Market speculators support bearish momentum

Source: Coinglass

How much are 1,10,100 LINKs worth today?

A look at the 12-hour long/short ratio on Coinglass revealed key backing for the bearish movement. Shorts held a 53.89% share of the open contracts, as against a 46.11% share for longs. Thus, futures traders were betting heavily on Chainlink and seeing more downside in the mid to long term.

Traders should look to exercise caution while monitoring BTC’s price action, as this could weigh significantly on LINK’s next move.