Chainlink: Why LINK may be looking the opposite way despite its downtrend
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the opinion of the writer.
Bitcoin [BTC] has made a series of higher lows in the past few days. After months of selling pressure, any and every small wave of buying would not mean the beginning of a new uptrend. Yet, on shorter timeframes, traders might be able to profit from these moves upward as well. While Bitcoin bulls fought to maintain prices above $20k, Chainlink [LINK] bulls were also fighting to push the prices higher. A lower timeframe bullish break meant that LINK could rise toward the $7 and $7.4 levels in the coming days.
Source: LINK/USDT on TradingView
The bounce from the $5.4 support level to $7.57 was used to plot a set of Fibonacci retracement levels (yellow). There are two things to consider. First, the massive drop from $9.5 to $5.5 in mid-June indicated tremendous selling pressure behind Chainlink. This was on the back of a strong downtrend from the beginning of April as well. Therefore, the longer-term trend was strongly bearish.
The second consideration was that, after the sharp drop, Chainlink has been unable to breach the $7.5 resistance area on multiple attempts. Besides, the entire area from $7-$7.5 has seen tests, followed by sharp rejections on the price chart.
Source: LINK/USDT on TradingView
Zooming in on the one-hour chart, a bullish market structure break was seen a few days ago. The price was able to close a session above the previous lower high (dashed orange) at $6.43. Since then, the price also made a series of higher lows.
It can also be seen that the 78.6% Fibonacci retracement level was respected. The bulls were able to force a session close above the 50% level
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