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Optimism [OP] faces a roadblock — Is a reversal likely?

2min Read

Optimism made an attempt to recover the ground that was lost last week. However, OP was faced with this roadblock and it could come in the way of the bulls’ momentum.

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

  • At press time, Optimism was on track to reverse last week’s losses. 
  • The derivatives market was gradually shifting to bullish. 

Optimism [OP] is fixated on becoming the go-to Ethereum [ETH] Layer-2 scaling solution of choice. A recent report established the network outperformed Arbitrum [ARB] on transactions and costs. The native token, OP, reacted positively to the development and sought to reclaim last week’s losses.  


Is your portfolio green? Check out the OP Profit Calculator 


However, OP’s recovery was headed to a roadblock that could expose the token to elevated sell pressure and possible price reversal. 

Will sellers exploit the roadblock?

Source: OP/USDT on TradingView

Last week’s (14 – 20 August) extended bearish pressure pushed OP to crack the $1.379 support. But the drop eased at the weekly bullish order block (OB) of $1.17 – $1.34 (cyan), allowing the bulls to front a recovery. 

At the time of writing, price action appeared ready to clear the immediate resistance level at $1.50. However, bulls will face another hurdle and the weekly bearish OB of $1.55 – $1.77 (red) if they clear the $1.50 obstacle. 

Sellers could exploit the above resistance levels as Bitcoin [BTC] struggled to stay above $26k. If so, a price reversal could offer a shorting opportunity with an entry at $1.55 and a take-profit target of $1.40. 

An H12 candlestick session close above $1.61 will invalidate the short set-up. In such an upswing scenario, the retest of $1.70 could be feasible. 

The Chaikin Money Flow (CMF) was above zero, indicating massive capital inflows into OP’s market. But the Relative Strength Index (RSI) hadn’t decisively crossed above the 50-mark. An RSI rejection at the median level could signal sellers’ re-entry.

Short positions discouraged

Source: Coinglass


How much are 1,10,100 OPs worth today


According to Coinglass, more short positions ($264k) were liquidated than longs ($162k) approximately 12 hours before the time of writing. The trend captures a building bullish bias in the derivatives market. 

But the spread, about $100k, wasn’t too big to confirm further upside was likely. Nevertheless, on the derivatives side, Open Interest rates and volume increased by 10% and +40%. So tracking BTC movement was crucial. 

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Benjamin Njiri is a Crypto Analyst and Journalist at AMBCrypto who specializes in technical analysis and identifying emergent market trends. He excels at breaking down complex chart patterns and on-chain data to make them accessible and actionable for investors. His rigorous analytical approach is founded on his academic background as a Telecommunication Engineering graduate. This discipline has equipped him with an expert understanding of signal processing and data analysis, allowing him to systematically filter market noise from true trend signals with engineering precision. Armed with this unique perspective, Benjamin focuses on providing clear, data-driven insights into the digital asset landscape. His work is dedicated to demystifying the intricate world of cryptocurrencies, empowering readers to understand the forces that shape the market and to navigate it with greater confidence.
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