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- LINK shows bullish divergence and rising money flow.
- Negative funding rate increases short squeeze risk.
- Breakout could push LINK toward $38, but $17.42 remains support.
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Chainlink (LINK) recently hit its lowest level since August 8, dipping briefly under $20. While the token has rebounded slightly, traders who rushed to short LINK may soon face unexpected pressure as bullish signals emerge. Here’s why Chainlink could flip the script and spark a sharp recovery.
Technical Signals Show Strength
On the 4-hour chart, Chainlink is displaying a bullish divergence despite printing consecutive red histogram bars. The Chaikin Money Flow (CMF) has climbed above the zero line, currently reading 0.20, its highest in weeks. This indicates capital inflows are surpassing outflows, suggesting that buyers are quietly regaining control.
Additionally, LINK is consolidating within a symmetrical triangle, a pattern often preceding a decisive move. A breakout above the upper trendline could trigger fresh momentum, potentially driving the price toward $23.36. With on-chain activity rising, the stage is set for a pivotal moment in LINK trading.
Bears Could Face Pressure
Despite the positive signals, the market’s funding rate has flipped negative, meaning short traders are paying longs to maintain positions. While this reflects bearish sentiment, it also sets the conditions for a possible short squeeze. If LINK price climbs, short sellers may be forced to close positions quickly, amplifying upward pressure and pushing the token higher in a rapid surge.
Daily Chart Outlook Suggests Upside Potential
On the daily chart, LINK has been contained within a descending channel, which contributed to recent selling pressure. However, the Money Flow Index (MFI) has broken its downtrend and approaches the neutral 50 line, indicating rising buying interest.
Also Read: Chainlink Price Breakout Imminent as Whales Accumulate and Demand Zone Holds
If LINK decisively breaches the channel’s upper trendline, a short-term rally could take it to $27.86, with a highly bullish scenario targeting $38.30. Conversely, a breakdown below the lower trendline could push LINK toward $17.42.
Chainlink is at a critical juncture. Technical indicators point to rising buying pressure, and the negative funding rate makes a short squeeze increasingly likely. Traders and investors should watch LINK closely, as a breakout could trigger one of the market’s more rapid upward moves in recent weeks.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
I’m your translator between the financial Old World and the new frontier of crypto. After a career demystifying economics and markets, I enjoy elucidating crypto – from investment risks to earth-shaking potential. Let’s explore!
