Optimism: Examining if OP can surpass $0.72 and race to…
The buying pressure over the past two days has been encouraging, but an OP rally past $0.72-$0.74 was not guaranteed.
- Optimism saw short-term bullishness, but it was unclear if the rally could continue past $0.74.
- The movement of Bitcoin over the rest of the week could guide OP’s price action.
Optimism [OP] showed heightened speculative activity. On the 6th of June, OP tested the $0.59 support level. Since then, it has rallied 20%.
Despite the bullish structure break on the daily, a rally to the range high was not guaranteed. The liquidity at $0.74 could play a pivotal role in the coming hours.
Swing traders will have a buying opportunity in case the mid-range resistance is flipped to support. Till then, risk-averse traders can wait for clarity.
Going short might not be feasible due to the bullish structure.
Optimism bulls lay siege to the $0.72 resistance
The 1-day chart showed a range formation (white) between $0.59 and $0.84. Optimism saw a bullish structure break (cyan) on the daily chart, encouraging a bullish bias among traders.
A move beyond the mid-range resistance would offer a swing buying opportunity targeting the range high at $0.84. However, at press time, the bullish momentum was underwhelming.
The MFI showed a reading of only 44, but no divergences yet.
The OBV also struggled to trend higher. Since mid-May, it has moved sideways, reflecting an equilibrium in buying and selling pressure. This helped explain the range formation.
It also hinted that traders and investors should not expect a breakout beyond $0.84
The 1-month liquidation heatmap showed that the buildup of liquidity around $0.72, the mid-range level, had been swept. Over the past couple of days, a bunch of short liquidations have accrued just above the $0.72 mark.
This meant that a move to $0.74 was possible in the short term, before a bearish reversal.
However, if Bitcoin [BTC] rallied past $110k and continued higher, OP might race toward the $0.85 magnetic zone next.
Data from Coinalyze showed that the rally to $0.72 was accompanied by a $22 million increase in Open Interest. The funding rate, which had been negative in June, began to shift in the past 48 hours.
The funding rate did not show overwhelming bullish sentiment, but it was a start. The spot CVD moved sideways in recent days, but the increasing OI promised heavy speculative activity.
This short-term bullishness could help propel Optimism beyond the local resistance.
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion
