Optimism hits key demand zone: Should bulls be hopeful?

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

• Optimism hit a crucial demand zone and bullish order block of $1.19 – $1.27. 
• Demand and funding rates improved, but bulls had no edge at press time. 

Optimism [OP] has retraced to a key demand zone, but bulls shouldn’t be too hopeful. OP has defended the $1.2 value thrice since mid-July. The recent reversal from $1.4 has hit the demand zone above $1.2 and could tempt bulls to go long, especially in a lower timeframe.

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

But Bitcoin [BTC] has eased near $26.4k and could go either to the range-low or reclaim $27k. So, BTC’s dilemma could put OP players on edge, but here are key levels to consider. 

Will buyers see a reprieve?

OP consolidated briefly above $1.349 before retreating to the demand zone and daily bullish order block (OB) of $1.19 – $1.27 (cyan). The reversal was caused by BTC dropping below the $27k level. 

The demand zone has proven steady thrice, leading to price rebounds. At press time, the recent retracement had eased at the zone, and bulls were out to defend it, as shown by green candlesticks. 

But a price reversal to the upside could be delayed unless BTC reclaims $27k. If so, the key resistance levels for buyers are $1.35 and $1.40. 

But a crack of the demand zone ($1.19 – $1.27), cyan, could weaken OP further. The next support will be $1.1 and $1.0. 

Spot market demand and buying pressure improved slightly, as shown by the uptick in OBV and RSI. Even so, the CMF labored around the equilibrium, indicating there weren’t substantial capital inflows into the OP market in the past few days. 

Open Interest and funding rates improved, but…

The Open Interest (OI) rates recorded improved from 17 September, including opened contracts to take short positions, as OP retreated from $1.4 towards the $1.2 demand zone.

Read Optimism [OP] Price Prediction 2023-24

The extended OI improvement after hitting the demand zone could suggest a possible reversal and bullish inclination. The positive funding rates could further fuel bulls’ hope. 

But the flat CVD (Cumulative Volume Delta) calls for caution, as neither sellers nor buyers had a market edge at press time.