LINK Price Analysis: Bulls fail to consolidate above key level, rally still intact

• Chainlink price jumps over 10% in return for 2023 on Wednesday morning.
• LINK takes a small step back as traders await US inflation numbers on Thursday.
• Expect to see some difficulties to the upside as two big caps await bulls.

Chainlink (LINK) price action dropped 1% during the European trading session on Wednesday after booking nearly 10% gains since January 1. The small step back should not come as a surprise and fits with the timing and level at which Chainlink price action is currently trading. After the rejection and failed attempt to break above the pivot level for January, a catalyst will trigger to see bulls trading above that monthly pivot as global markets await the US inflation data on Thursday.

Chainlink price to perform a small fade in order not to overheat

Chainlink price was on a good track to break and close above the monthly pivot level at $6.25 but failed to do so. A sign on the wall already came on Monday when bulls were chasing the price action and received a rejection against that level, followed by a close below it. On Tuesday, a similar picture with bulls unable this time to consolidate above the monthly pivot and instead, turning into a small bull trap.

LINK could thus be in for a small fade and consolidation, which is good for the Relative Strength Index (RSI) as that was quickly moving toward the overbought area. For the time being, do not expect a broad sell-off as several market participants will rather wait for the US Consumer Price Index figures that measure inflation on Thursday, which may be used as a catalyst to boost price action back up again. Key levels for a pop higher are $6.25 and just above there at the 55-day Simple Moving Average (SM) near $6.37. These levels need to be dispatched with before traders start to think about $7 near the end of January.

LINK/USD daily chart

A bigger risk to the downside could come if that bull trap gets activated due to a bigger and broader sell-off. That would not happen alone in LINK but would require a similar plunge for equities and rise in US Dollar strength.. If that happens, expect a full unwind of the current gains and to see price action dip below $5.50, with support near the $5.27 marker as a significant supportive area.

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