What you need to know
- Chainlink’s bullish framework faces a major test at $17.50. Open Interest and spot market dominance support the rally. On-chain metrics such as MVRV, NVT and Open Interest signal overheated situations. Be cautious near resistance.
Chainlink [LINK] The price of the stock has extended its upward trend, creating a bullish structure that is climbing toward $17.39 as a crucial resistance.
After reclaiming its mid-range of $15.90, LINK has formed higher highs and lows, demonstrating consistent buyer power.
At the press time, LINK closed at $16.59, a close to a previous rally-capping level.
This rally did not succeed when the price previously tested resistance. This retest will either spark another rise or a drop.
TradingView
Is it possible to push LINK past its resistance?
As shown by the Positive Spot Buy Volume CVD, over a 90 day window.
Naturally, this suggests that aggressive buyers continue to outpace sellers in LINK’s spot markets—a trend that often supports continuation rallies.
But this alone will not ensure a breakout. The momentum could stall without an increase in the activity of all exchanges.
LINK is still recovering, but the market-taker dominant position indicates a strong demand.
Do THESE ratios suggest overheated conditions?
At the time of publication, MVRV Ratio had risen to 37.87%. This puts most investors in profit. In the past, these levels have caused localized tops when profit-taking kicked in.
Additionally, NVT ratios have seen multiple spikes which indicate that there is a disconnect in price and network activity.
The NVT may indicate that prices are outpacing the on-chain utility, even though rising prices could be a sign of optimism.
LINK may be moving into a speculative area, where traders are advised to monitor potential reversals.
How does the reverse in market funding reflect on sentiment?
The Funding Rates have turned positive after several weeks of negative rates.
A positive funding means that traders are prepared to pay an extra premium for a long stay. The positive Funding also implies improved trader’s confidence.
This confidence is not without risk. If prices stagnate, the same longs might face liquidation.
Open Interest on the rise: A source of momentum? Or a cause for volatility increase?
Open Interest (OI), at the time this article was written, had risen 8.47% over the past 24 hours, to $843.05 millions, indicating a strong level of participation by derivatives traders. The rise in Open Interest (OI) is a sign of a rising speculative interest and coincides with the current price increase.
However, high OI may also indicate potential volatility, particularly if positions that are overleveraged get liquidated.
Binance Heatmap shows clustered transactions just under the $17 area, which suggests that an upswing or downswing in price could occur.
While momentum is bullish, it’s prudent to be cautious near resistance.
Can LINK free itself from the range trap or will it persist?
Chainlink has regained strength, as bulls continue to push towards a critical resistance level of $17.50. The bullish outlook is supported by the spot demand, OI, and funding.
On-chain metric and clustered liquidity suggest that an acceptance is possible.
Whether LINK turns this range of support into a rejection or faces another, will determine the short-term trend.
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Source: ambcrypto.com
