Optimism stalls at $1.59 – Can shorting yield gains?
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion
ALT HD: Optimism consolidates losses above $1.50 – Are more losses likely?
- OP consolidated August losses above $1.50
- Overall, funding rates wavered over the last few days
Optimism’s [OP] August losses threatened to turn the retracement into a downtrend. The altcoin shed over 15% of its value, dropping from $1.83 to $1.52 in two days (8-9 August). However, it consolidated the losses above $1.50, temporarily stopping the drop from turning into a downtrend.
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Optimism’s OP Stack, a modular and open-source method of building blockchain solutions designed for Ethereum, recorded an uptick in projects too. In fact, a recent report evaluated the impact of such development on OP’s long-term prospects.
OP was blocked at $1.59
The early August drop breached a previous resistance-cum-support zone of $1.59 – $1.66 (red). In addition, the drop left a price imbalance coinciding with the $1.59 – $1.66 zone. In most cases, price action returns to fill price imbalances before continuing with its overall direction.
Ergo, the confluence of a resistance zone and a price imbalance could act as a solid bearish zone in the next few hours/days. So, another price rejection at the zone could head lower to the immediate support of $1.50.
If so, shorting the asset at $1.590 with a take-profit target of $1.50 could offer modest gains. A close above the resistance zone will invalidate the short set-up, especially if Bitcoin [BTC] convincingly closes above the range-low ($29.5k).
The Relative Strength Index (RSI) and the Chaikin Money Flow (CMF) recorded negative readings since 9 August, underscoring the muted buying pressure and capital inflows.
Funding rates wavered
According to Coinalyze, a crypto-derivative data tracking platform, OP’s aggregated funding rate fluctuated over the last few days. The trend underscores a bearish inclination that could embolden sellers and reinforces the above shorting idea.
How much are 1,10,100 OPs worth today?
However, the CVD (Cumulative Volume Delta), which tracks sellers’ and buyers’ control, dipped but moved almost sideways from 10 August. The dip illustrates sellers’ control, but the sideways movement leaned on neither buyers nor sellers and calls for caution.