Optimism hits demand zone again: Can sellers break past
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
- Price rejection at $1.4 resistance saw OP drop back into the $1.2 demand area.
- Futures market data revealed tight margins between buyers and sellers.
The $1.2 demand zone continued to provide Optimism [OP] bulls with a safe haven from the relentless selling pressure on the higher timeframes. Despite the best attempts of buyers, Optimism made another higher low after the price rejection at the $1.4 resistance.
Read Optimism [OP] Price Prediction 2023-24
Bitcoin [BTC] stabilizing at $26k over the past day eased the selling pressure a little. However, sellers remained active with a view to breaking below the critical demand zone.
Will demand zone come to the rescue of bulls again or can bears prevail?
The $1.2 demand area has been critical for bulls over a two-month period. In mid-July, bulls rallied from the demand area to touch $1.8. However, bears took over in August and September with prices touching the demand zone again on 17 August and 11 September.
Even though the demand zone has been defended thrice, the current market conditions could give sellers an upper hand to break below the $1.2 price zone.
If BTC dips under $26k, sellers could break through $1.2 with targets at $1 to $1.1. On the flipside, if BTC advances back to $27k, this could strengthen bulls again with profit levels at $1.35 to $1.4.
Meanwhile, the Relative Strength Index (RSI) trended close to the oversold zone while the Chaikin Money Flow (CMF) stayed around the zero mark. This hinted at a lack of buying pressure and muted capital inflows.
How much are 1,10,100 OPs worth today?
Buyers and sellers evenly matched
The exchange long/short ratio data revealed the tight margins between longs and shorts in the futures market. With a $1.35 million difference in open contract positions, neither buyers nor sellers had any significant advantage.
As such, Optimism’s price action in the long term is most likely to follow BTC’s. Ergo, market speculators should track Bitcoin’s price for optimized trades.