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Optimism (OP) Price Has Created a Local Top, What’s Next?

The price of Optimism (OP) has been rejected by the long-term pattern’s resistance line and has broken down below a significant support zone. It is expected to continue decreasing in the near future.

Long-Term Pattern

The price of Optimism (OP) has been trading inside an expanding wedge since May 2022. The price has tested both the support and resistance of the wedge several times, confirming the validity of the pattern.

During the week of March 11th to 17th, 2024, the OP price was once again rejected by the resistance line of the pattern (red arrow) and formed a bearish engulfing pattern. This is a bearish pattern, indicating that the bears are selling aggressively at higher levels.

Additionally, the weekly RSI indicator has formed a significant bearish divergence and crossed below 70, supporting the possibility of further decrease.

Therefore, the OP price may have formed a local top for the current rally. The nearest downside target is found at $3. Breaking down below this zone could lead to a rapid decrease towards the long-term pattern’s support line at $1.5, a 59.08% decrease from the current price level.

OP/USDT weekly chart. Source: TradingView

Short-Term Outlook

The daily chart shows that the OP price has been trading within the range of $3 to $4 since December 26th, 2023.

On March 5th, 2024, the Op price broke above this range and formed a large bullish candlestick (green arrow). This is a bullish development, indicating that the uptrend has been continued.

However, instead of a strong increase, the OP price only consolidated above the $4 zone and declined back below it on March 15th, making the previous breakout only a false breakout (red ellipse). But such false breakouts are often followed by sharp declines.

The daily RSI indicator has dropped below 50 and is sloping downwards, signaling that the bears are controlling the price action in the short term.

Therefore, the price of OP may decrease back to the range support at $3 once again.

OP/USDT daily chart. Source: TradingView

Conclusion

The most probable outlook suggests that the price of OP will continue to decrease in the near future. The nearest target is $3, with a further target of $1.5.

The bearish outlook will be invalidated if the OP price breaks above the $4 zone on the daily timeframe.

Disclaimer: Please note that this article is for informational purposes only and should not be taken as investment advice. As an investor, it is important to do your own research before making any decisions. We are not responsible for any investment decisions you make based on this information. Not Financial Advice.

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