Chainlink drops below $7 as selling pressure overwhelms the bulls

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

• The sudden drop to $6.8 caused large amounts of long positions to be liquidated.
• The price action showed that a $7 retest could be followed by another downward move.

Chain link [LINK] had an optimistic view of the price chart last week. The bulls knocked on the doors of the $7.7 resistance zone with force. Still, the sellers managed to prevail. On a retest of the same resistance zone, LINK was rejected, with losses of 10% within 36 hours starting August 14.

Read Chainlinks [LINK] Price Forecast 2023-24

The technical indicators showed that LINK is likely to fall further in the coming days. The RSI showed strong bearish momentum and the OBV recorded increased selling volume over the past two days.

Chainlink’s bullish order block was violently broken

Source: LINK/USDT on TradingView

The H4 bullish order block (cyan) extended from $7-$7.2. It was the region where LINK started its earlier rally which was rejected at the $7.7 level. A retest of this zone could lead to an increase in prices.

This was not to be. During the recent selloff, a large candle with huge trading volume closed out the H4 trading session below the order block. Therefore, this region can be expected to serve as resistance as it was turned into a bearish breaker block.

In the South, the $6.58 and $6.06 levels were worth investigating. The bulls could cause an increase in prices in those places. Short sellers can seek positions targeting these levels with invalidation above the breaker block.

How much is 1, 10 or 100 LINK worth today?

Long liquidations painted a not so good picture

Source: Coin analysis

When Chainlink prices crossed the $7 mark and dropped to $6.8, it triggered a cascade of long liquidations. These positions were forced to sell and added to the bearish sentiment in the market. Lung liquidations have been slowly ticking up again in recent hours.

The OI has remained relatively stable after the dive. If the OI were to rise along with declining prices, this would indicate an acceleration in opening short positions. This would reinforce bearish sentiment in the market.