Heavy shorts raise odds of explosive LINK squeeze | Credit: Hameem Sarwar
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Key Takeaways
Chainlink has bounced from its recent swing low, forming a bullish divergence amid rising capital inflows.
With heavy shorting, LINK is primed for a potential short squeeze if price breaks above its symmetrical triangle.
A bullish breakout could extend gains toward $38.30, but failure to hold support risks a drop to $17.42.
Last Thursday, Chainlink (LINK) price sank to its lowest since Aug. 8, briefly dipping under $20. Since then, the token has bounced back from that floor, but the sharp decline set off a wave of heavy shorting by traders.
With liquidity thinning and leveraged bets piling up, Chainlink price finds itself where a sudden upside move could trigger a painful short squeeze.
Bears may be walking straight into a trap — here’s why.
Chainlink Wants to Flip the Script
On the 4-hour chart, Chainlink is showing signs of strength. The token has formed a bullish divergence, even as it printed three consecutive red histogram bars.
Adding to this setup, the Chaikin Money Flow (CMF) has climbed above the zero line, signaling that capital inflows outweigh outflows.
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At press time, the CMF reading stands at 0.20, its highest in weeks, suggesting buyers are quietly regaining control.
This setup between divergence and rising inflows could set the stage for a recovery if momentum builds further.
Furthermore, CCN observed that Chainlink’s price is currently consolidating inside a symmetrical triangle. This pattern signals that a big move is brewing, though it does not immediately reveal the direction.
LINK is approaching a make-or-break moment with tightening price action and rising on-chain activity. Since the CMF reading has increased, a breakout above the triangle’s upper trendline could unleash fresh bullish momentum.
If successful, Chainlink’s price might breach the resistance, potentially rising to $23.36.
Bears Could Be in Trouble
Despite the bullish technical setup, Chainlink’s funding rate has flipped negative. This means that short traders are paying longs to keep positions open, reflecting a market that is heavily leaning toward bearish bets.
Paradoxically, this could work in LINK’s favor. As the price rises, those heavily shorting the token may be forced to close their positions quickly to avoid losses.
Such liquidations can cascade into a short squeeze, where accelerating buy orders push LINK’s price even higher in a short period.
In a highly bullish scenario, the market value could hit $38.30. However, a breakdown below the channel’s lower trendline could push Chainlink’s price toward $17.42.
Disclaimer:
The information provided in this article is for informational purposes only. It is not intended to be, nor should it be construed as, financial advice. We do not make any warranties regarding the completeness, reliability, or accuracy of this information. All investments involve risk, and past performance does not guarantee future results. We recommend consulting a financial advisor before making any investment decisions.
Victor Olanrewaju is a crypto analyst and reporter at CCN with deep roots in on-chain research and technical analysis. His crypto journey began in 2017, but it was the 2020 Uniswap airdrop that sparked a full-time pivot into the space.
With a foundation in copywriting, Victor honed his craft creating high-converting content for leading crypto brokers — most notably an XRP price prediction that ranked #1 on Google during the 2021 bull run.
He later joined AMBCrypto in 2022, where he combined storytelling with technical and on-chain analysis to cover key market narratives.
In 2024, he expanded his expertise at BeInCrypto, collaborating with analysts and using tools like Glassnode, Santiment, and IntoTheBlock to break down Bitcoin and altcoin trends.
At CCN, Victor covers the top cryptocurrencies, memecoins, macro shifts, blending real-time insights with deep-dive metrics.
He holds a Bachelor’s degree in Physics from the University of Ibadan, equipping him to simplify complex data for a wide audience. Follow his work or connect on LinkedIn or X.
