OP traders show bullish bias but will lack of spot demand cause trouble?
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion
- Optimism has room to climb higher provided the $1.4 resistance was convincingly flipped to support
- The sentiment among speculators showed a lack of conviction that OP can climb higher
Optimism [OP] has a bearish outlook on the one-day timeframe but a bullish one on the four-hour chart. The defense of the $1.2 support zone by the buyers has been impressive over the past week as OP gained more than 10%.
Read Optimism’s [OP] Price Prediction 2023-24
A recent report highlighted the unusually high user retention rate on the Optimism chain. This suggested that users were satisfied with the use cases on offer. The steps Optimism has taken to ensure this can go far in feeding long-term investor confidence.
The mid-range resistance saw bulls and bears skirmishing
On 15 September, OP managed to climb above the $1.37 level. In doing so it broke the previously bearish structure on the four-hour chart. Over the past few days, the $1.3 region was flipped to support. However, OP traded within a range that extended from $0.895 to $1.87, with the mid-range level (dashed white) at $1.39.
This was the area where the bulls struggled to push the bears aside. Hence, despite the bullish structure, it was possible that the price could dip toward $1.3 again. The On-Balance Volume (OBV) showed a healthy amount of buying volume over the past week.
On the other hand, the Relative Strength Index (RSI) noted weakening bullish momentum over the last three days. Therefore, risk-averse traders can wait for a move above $1.4 and retest to buy the token targeting the $1.62 resistance, which sat just below a bearish order block from the one-day timeframe.
The dwindling spot CVD suggested buying pressure was dull
The one-hour chart from Coinalyze showed prices dithered about the $1.4 mark since 16 September. The Open Interest was also bland during this time and showed a lack of conviction from the Optimism market participants.
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The concern for bulls targeting the $1.62 resistance was the downtrend of the spot CVD since 16 September. The indicator highlighted a lack of demand in the spot markets. The funding rate was positive after a dip on 19 September. Overall, the path northward has obstacles that the bulls might not overcome in the coming days.