Disclaimer: The information presented does not constitute financial, investment, trading or any other advice and is solely the opinion of the author
The sharp drop on Wednesday was a return to support on the higher time frames. The mid-range support and resistance at $8.12 are levels that may signal the direction of the next move.
The price of Chainlink tokens fell sharply from $8.6 to $7.8 on Wednesday. Bitcoin also posted losses, but Bitcoin Dominance remained above 46.8%.
This suggested that altcoins were slower to gain than BTC over the past month, and this needed to change before alts could move north.
Read Chainlinks [LINK] Price Forecast 2023-24
Bitcoin bulls managed to defend the $28.6k support, but the lower timeframe charts failed to inspire bullish confidence.
On the other hand, the pullback to a higher time frame support caused the buyers to fight back. Can Chainlink buyers seize this opportunity and continue their rally?
The $7.6 defense meant bulls had a chance to reverse recent losses
Source: LINK/USDT on TradingView
As of May 2022, Chainlink trades within a wide range that stretched from $5.5 to $9.6. The midpoint of this range was $7.6 and another level of significant resistance nearby was $8.12. Over the past week, LINK bulls had beaten both resistances.
The sell-off on Wednesday meant that lower time frames had a bearish market structure, but the daily time frame continued to show bullish signals.
The RSI also failed to drop below the neutral 50, indicating that a downtrend had not started. In addition, the OBV also failed to see a major pullback, suggesting that buying pressure has been steady for the past few weeks and may have seen a move against the trend yesterday (April 19).
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The plunge left a real value gap between $8.12 and $8.38 in the 4-hour time frame, which could be retested before LINK fell again.
A drop below $7.6 would be a warning sign that LINK was changing direction longer term. A daily session close to USD 7.1 would flip the structure to bearish and show that a move towards USD 5.8 was likely.
The slump in OI showed discouraged bulls, but sentiment was slightly more favorable for the bulls
Source: Coinalyse
Open Interest had been falling for the past 48 hours, even as LINK’s momentum started to stagnate at $8.7.
On the lower timeframes, the reversal was much more pronounced and was accompanied by a huge drop in OI, amounting to $35 million. In the last 12 hours, the OI has been right next to the price.
The funding rate remained positive despite the sharp drop, suggesting that speculators were largely in long positions.
All things considered, short-term sentiment showed that the bulls had some hope. The OI should climb higher alongside LINK prices to reinforce this idea.
This post Chainlink buyers are winning the battle for $7.6 support, but here’s the problem
was published first on https://ambcrypto.com/chainlink-buyers-win-battle-at-7-6-support-but-heres-the-issue/
