Optimism faces double obstacles – Will bulls prevail?
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion
- OP’s recovery must deal with two bearish OBs to gain more edge.
- Price could go either way, given the little spread between longs vs. shorts.
Bitcoin [BTC] has remained neutral since 22 June. The King coin has been consolidating above $30k for about three weeks. The consolidation set Optimism [OP] to drop below $1.5, oscillating between $1.1 and $1.28.
So far, OP’s value has remained below $1.3 since 6 July. At the time of writing, bulls aimed at the $1.3 to flip the H2 structure bullish, but there were two roadblocks on their way. Nevertheless, there were still re-entry chances for bulls at these levels.
Can bulls mount above the double hurdle?
On the 2-hour chart, the extended drop on 5 July chalked a bearish order block (OB) just below $1.3. In addition, another bearish OB of $1.244 – $1.284 (white), below $1.3, makes the area below $1.3 a strong bearish zone.
So, near-term bulls could be repelled and rejected again at the above bearish zone. Sellers could take advantage of the hurdles and devalue OP to immediate support near $1.2.
Since late June, the $1.16 – $1.2 has been a crucial support zone on the lower timeframe. If the trend repeats and the zone holds, a corrective rebound could be feasible from this level. So, bulls could seek re-entry at the zone, targeting the bearish zone below $1.3.
An extended drop below $1.16 will invalidate the bullish thesis. Such a scenario will make a retest of $1.1 likely.
Meanwhile, the RSI crossed above the neutral level, denoting increased buying pressure in the past few hours. Similarly, the OBV registered an uptick suggesting slight demand for OP in the same period.
Futures markets undecided
Based on the OP Exchanges Long/Short Ratio, the futures market was undecided on the 4-hour timeframe. The metric indicated a little spread between long vs. short positions, which meant sentiment was neutral and the price could take any direction.
How much are 1,10,100 OPs worth today?
Meanwhile, over $500k worth of long positions were wrecked in the past 24 hours against short positions <$200k. The trend underscores a long-term bearish inclination that could further derail bulls attempting to zoom past $1.3.
So, bulls could wait and buy either a retest of $1.2 or a breakout above $1.3.