Chainlink price action shows that a bull trap could form in this zone

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

• Chainlink noted a short-term stake around $6.6.
• A rise in prices to this level and subsequent reaction would shed light on market sentiment and the direction of the next move.

Chain link [LINK] has a bearish market structure in the short term. The 4-hour price chart and lower timeframes showed that it has not shown much volatility over the past three days. Bitcoin [BTC] could play an important role in determining the direction of the next move for LINK and many altcoins in the crypto market.

Realistic or not, here is LINK’s market cap in BTC terms

Chainlink also witnessed a bearish structure on the 1-day time frame, following the losses it suffered in early August. To reverse this bias, the price would have to form a higher low and a higher high, which could take some time to develop.

The near-term consolidation just below the $6.6 mark meant LINK could pull north

Source: LINK/USDT on TradingView

The 1-hour chart that an imbalance (white) was present that extended to $6.5. In the 72 hours before going to press, Chainlink traded between USD 6.13 and USD 6.3 and saw little volatility within this tight range.

The RSI managed to climb above the neutral 50, showing some short-term bullish momentum. Still, the structure on the H1 chart was not in favor of bulls. The OBV also posted slight gains, but nothing indicated a breakout above $6.5.

The $6.56-$6.62 zone represented a near-term consolidation zone on the way down for LINK. Therefore, a retest of this zone would likely provide a selling opportunity for shorter duration traders. At the $6.85 level, LINK can also be rejected. But gains for the token above that level would indicate that the bulls have begun to take control.

Is your wallet green? Check out the Chainlink Profit Calculator

The lack of volatility kept speculator sentiment bearish over the weekend

Source: Coin analysis

Weekend price action is generally uneventful, and futures market participants may not come in large numbers. Chainlink’s price action over the past three days did not inspire bullish confidence, although the spot CVD crept up by a small margin.

The lack of significant change in Open Interest meant that traders were waiting for momentum and had no conviction in either direction at this point. Short sellers can wait for a move to $6.6 or $6.85 to look for entries in the coming days.