Chainlink Price Forecast: LINK technical breakout eyes $16 amid improving on-chain metrics

Chainlink is nurturing an uptrend after closing the day above the 50 Simple Moving Average. The immediate target on the upside is $16, but the recovery could go as high as $18 if enough volume is created behind LINK.

Chainlink breaks above a key technical pattern

The formation of a descending wedge pattern on the daily chart resulted in the midweek bullish outlook. As Bitcoin hit new all-time highs close to $24,000, LINK rallied past $15. However, the seller congestion at $16 was left untested.

A falling wedge pattern comes into existence when an asset’s price has sustained a downtrend over time—the pattern hail from the downtrend, losing momentum while trendlines drawn along the peaks and the lows converge. Bulls start to step in to regain control over the price, and a breakout happens just before lines converge.

High volatility swept across the cryptocurrency market, resulting in a sharp downswing to the support at $12. Recovery ensued, putting Chainlink back on the growth path to $16. The Relative Strength Index reinforces the improving technical picture as it grids towards the overbought area.

LINK/USD daily chart

According to Santiment, a leading provider of on-chain indicators and analysis, Chainlink’s network growth is rising. Following the spike in November that saw the number of new addresses joining Chainlink top 3,450, a decline touched 2,250 on December 15.

At the time of writing, new addresses on the network have surged to almost 3,600, representing a 37.5% increase. High network growth is usually a bullish signal for the project’s future adoption and the token’s value. Hence, the ongoing Chainlink price recovery could gain momentum.

Chainlink network growth chart

Note that the expected breakout to $16 and $18 will fail to materialize if Chainlink slumped and closed the day under the 50 SMA. Selling pressure is likely to increase, pointing LINK on a downward trajectory to retest $12 and $11, respectively.