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Chainlink (LINK) is showing signs of a potential bullish breakout after testing a key resistance level, forming a bullish divergence, and seeing an increase in exchange outflows.
As of Friday, Chainlink was trading at $12.60, up from a low of $10.15 earlier this month. This price movement comes as LINK faces resistance at the $12.60 mark, a level it has struggled to break through in recent months.
A key factor that could drive further price action is the rise in exchange outflows, as more investors transfer their tokens to self-custody. According to Nansen data, the amount of Chainlink held on exchanges dropped by 1.1% over the past week, from 263 million to 260 million tokens. This suggests growing investor confidence and a shift away from centralized exchanges.
Chainlink is widely regarded as one of the most essential utility tokens in the crypto space, with its decentralized oracle network securing over $30 billion in total value. Its ecosystem includes major projects such as AAVE, Compound, Venus, and Spark, contributing to its standing as a dominant player in the decentralized finance (DeFi) sector.
On the technical front, Chainlink has been in a strong downtrend for the past few months, dropping from a high of $30.80 in November to the recent low of $10.15. However, it has recently retested the key resistance at $12.60, marking a critical point for potential upward movement.
The price action has also formed a falling wedge pattern, a common technical signal that often indicates a bullish reversal. In addition, the MACD indicator has shown signs of momentum building, with both of its lines moving closer to the zero line. Similarly, the Relative Strength Index (RSI) and the Awesome Oscillator are also trending higher, further suggesting a potential breakout to the upside.
With this bullish divergence in place, there is growing potential for LINK to break through resistance and reach the psychological level of $15, a 15% increase from the current price. If the trend continues, bulls will likely target this level as the next key hurdle.
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