LINK spot demand weakens, but will this lead to a sizable pullback?

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

• Chainlink retains its short-term bullish structure
• The drop in OI over the weekend need not be alarming- but the spot CVD could be pointing toward a drop in prices

Chainlink [LINK] saw its uptrend interrupted over the weekend. The debut of the Cross Chain Interoperability Protocol (CCIP) on the BNB Chain was a positive development for the ecosystem.

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

Yet, it was also possible that this news spurred holders to take profit, especially as the price of LINK closed in on a higher timeframe resistance region. The past few hours saw LINK dip below $8 — can the bulls maintain their momentum?

The bearish order block at $8.2 halts the Chainlink rally- for now

Source: LINK/USDT on TradingView

The $7.96-$8.45 region was highlighted in red and represented a bearish order block from the 12-hour timeframe. The price action on 20 July saw this resistance zone develop, and its first true retest 71 days later showed some bearish resilience.

Yet, the market structure remained bullish on the H4 chart. A move below $7.67 would be needed to shift this bias to bearish. Therefore traders can keep an eye on this level and can plan their trades accordingly.

The Relative Strength Index (RSI) was at 52 at press time. It signaled the uptrend was still in play but the momentum was weak at press time. On a similar note, the On-Balance Volume (OBV) had been in a strong uptrend since 19 September but stalled over the weekend.

A move below $7.67 could see a retracement as far southward as $6.28, the 78.6% Fibonacci retracement level. Meanwhile, a move above $8.5 (above the bearish OB) would likely see LINK rally to $8.8-$8.9 before encountering major resistance.

Short-term market sentiment turns lukewarm as Chainlink encounters sell pressure

Source: Coinalyze

Over the weekend the Open Interest remained flat as the price saw a slow decline from the $8.2 zone. More worryingly the spot Cumulative Volume Delta (CVD) also witnessed a downward move. This showed selling volume was dominant in the spot markets over the past two days.

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Therefore it was possible that Chainlink could drop to $7.67, or even deeper. Trying to long LINK at the $8 region was not a good idea. Meanwhile, traders looking to go short can wait for a break in the H4 market structure.