Optimism: Can the Q3 support offer buying opportunities?

Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.

• OP hit a key Q3 2022 support zone at $1.2.
• There was a massive buy limit order at $1.20 and $1.15 at press time. 

In the past quarter (Q3), Optimism [OP] buyers have exploited the crucial support zone of $1.19 – $1.27 (cyan). At press time, the recent pullback hit the Q3 support and could attract buyers. 

Read Optimism’s [OP] Price Prediction 2023-24

Meanwhile, Bitcoin [BTC] dropped to the previous breakout level of $27.5k, just an inch away from a daily chart liquidity area of $27.0k – $27.2k. A BTC rebound from the above key support could favor OP buyers. 

Will the Q3 support rescue bulls again?

Source: OP/USDT on TradingView

The Q3 support zone doubled as a daily bullish order block (OB) formed on 13 July. The support zone saw a strong rebound in August and September. That begs the question, can it rescue bulls again in October?  

If BTC defends the $27k level in the next few days, OP could rebound at the above Q3 support zone of $1.19 – $1.27 (cyan). If so, the rebound could offer +13% if it hits the second bullish target of $1.4.

But a bounce to the first bullish target of $1.35 would yield a potential 9% gain. 

However, a drop below the support zone and subsequent close below $1.17 will invalidate the above long set-up. Such an extended drop could tip sellers to extend gains to $1.0, especially if BTC drops below $27k. 

Meanwhile, RSI and OBV retreated southwards, indicating selling pressure intensified amidst a decline in Spot market demand for the altcoin in the past few days. 

Massive buying interest for Optimism at $1.2

Source: MobChart

Based on order flow analysis using MobChart data, the demand zone level of $1.20 had massive buy limit orders at press time on the Binance Exchange. There was a demand of over 400k OPs at the $1.20 level, translating to $488k at press time value of $1.22. 

How much are 1,10,100 OPs worth today? 

There were other buy limit orders at $1.21 and $1.23 at press time, further reinforcing that a rebound could be likely amidst a spike in demand at Q3 support if BTC doesn’t drop below $27k. 

On the sell side, there was a significant sell limit order at $1.45. So, the order flow analysis at press time validated the long set-up. But a bearish BTC will invalidate the bullish bias.