There was no Bitcoin stop (yet), as it exceeded $ 40k. It was trading at $ 41,780 at the time of writing. Chainlink was also strongly bullish, but it also experienced some bumps in the road. Over the past week, it fell from $ 11.5 to $ 17.45 before falling to $ 14.55. It was a volatile trajectory and the price was at a crossroads.
Chainlink was ranked 10th on CoinMarketCap with a market cap of $ 6.4 billion. At the time of writing, the price was balanced on a knife blade at $ 16.02.
Chainlink 1 hour chart
Source: LINK / USD on TradingView
A bearish (orange) divergence between price and momentum (RSI) has been exposed. The RSI continued to hit lower highs. LINK struggled to find its way up to $ 17.5.
It encountered severe rejection and found support at the $ 14.5 level. Then it recovered somewhat to trade at $ 16.02 at the time of writing.
However, this cannot yet be called a convincing recovery. A downward movement once again may be likely for LINK.
Reasoning
There was a lack of trading volume as LINK rebounded from the $ 14.5 support level. In addition, the OBV shows that the sales volume has increased steadily (white) over the last few days.
The RSI is found its way above the neutral value of 50. A lack of volume could portend another decline for LINK in the hours to come.
Combined with a surge in Bitcoin, some traders might be looking to sell alternative assets like LINK. They could seek out the profits of BTC. While the shorter time frames suggested that LINK’s bearish momentum was waning, the lack of buying volume was a red flag.
Position
Admission: $ 16
Stop-loss: $ 16.4
Take-Profit: $ 14.55
Risk-reward: 3.61
Conclusion
This short scalp trade would not be indicative of a trend reversal for LINK. Chainlink goes $ 11.5 over the past week. This downward movement could be the start of a retracement of those gains.
A move below $ 14.55 would see LINK lose the short-term range it formed (cyan). A steadfast defense of the $ 14.55 level can then be assessed for a potential long entry towards $ 16, the midpoint of the range. However, this would require the OBV to go up.
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