Chainlink’s Cautious Bulls and Bearish Sentiment
Chainlink’s [LINK] price has been a rollercoaster, with bulls showing caution as it approached the $11 mark. The short-term outlook has been bearish, hinting at a potential drop towards $8. This sentiment is reflected in the technical analysis, which indicates persistent seller pressure over the past few days.
The token has been trading within a bearish pennant pattern, a formation that typically signals further downward movement. Despite this, there are glimmers of hope for long-term investors, as Chainlink has recently integrated four of its services across 12 blockchain networks. This expansion and increased adoption could be promising for the future.
The Struggle Below $11
Following significant losses on August 5th, Chainlink bulls managed to push the price up to $10.8, but no further. Throughout August, sellers have maintained dominance, as evidenced by the Chaikin Money Flow (CMF) indicator remaining below -0.05, signaling heavy capital outflow.
The daily Relative Strength Index (RSI) has also been bearish since LINK fell below its previous range lows at $12.7. In the short term, the bearish targets are the local lows at $9.45 and $8. The $10.8-$11.2 zone is expected to act as resistance, providing an entry point for short-sellers. Should the price drop below the recent low of $8.08, the Fibonacci extension level suggests $6.4 as another bearish target.
Evaporating Bullish Sentiment
In the past three days, Open Interest in LINK has gradually increased as the price moved from $10 to $10.4. This 4% rise was accompanied by a slight uptick in the spot Cumulative Volume Delta (CVD), indicating some buying interest.
However, the past 24 hours have undone much of the bulls’ progress. Chainlink faced rejection at $10.4, and Open Interest quickly dwindled, reflecting a shift towards bearish sentiment. The spot CVD also declined, and the Funding Rate fluctuated between positive and negative, highlighting a speculative market with uncertain sentiment.
Market Dynamics and Future Outlook
The hesitation below $11 has been a critical point for Chainlink. After the heavy losses in early August, the bulls’ attempt to drive the price up to $10.8 was met with strong resistance. The sellers’ dominance throughout the month is evident in the CMF indicator, which has consistently shown heavy capital outflow.
The daily RSI’s bearish trend since LINK fell below $12.7 further underscores the bearish outlook. In the near term, the local lows at $9.45 and $8 remain key targets for the bears. The $10.8-$11.2 zone is likely to serve as a significant resistance level, providing opportunities for short-sellers. If the price falls below the recent low of $8.08, the Fibonacci extension level points to $6.4 as another potential target.
Conclusion
Chainlink’s recent price movements and technical indicators suggest a challenging environment for bulls in the short term. The persistent seller pressure and bearish patterns indicate potential further declines. However, the token’s recent integrations and expanding adoption across multiple blockchain networks offer a glimmer of hope for long-term investors. As always, market participants should stay informed and consider both technical and fundamental factors when making investment decisions.
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.