As Bitcoin resonates near the $98,000 support level, altcoins like Optimism (OP) are standing at a crucial support level. Over the past 24 hours, OP price has increased by 4.3%, despite a 7-day crash of 22.26%.
Optimism trades at a market price of $1.14, while maintaining a market cap of $1.5 billion. The recent recovery raises hopes among traders, but questions remain. Will the intraday recovery prolong to overcome the recent market crash?
Falling Wedge Pattern Signals Potential Reversal in Optimism Price
In the daily chart, the downfall in the Optimism price trend forms a falling wedge pattern within the broader bearish setup. Historically, this pattern is known to signal potential bullish reversals.
OP price trend has lost nearly 60% of its value over the past two months, reflecting strong bearish pressure. However, such sharp declines are often followed by relief rallies as buyers attempt to regain control.
Key Support Levels Holding Strong
Currently, the altcoin is holding the fort near the $1.10 crucial support. This price level aligns with the S1 pivot support level and the local support trendline, making it a critical zone to watch.
With lower price rejections in the past few daily candles, Optimism is hinting at a bullish reversal. This suggests that buyers are stepping in to defend the key support, preventing further downside.
Momentum Indicators Favor Bulls
Supporting the upside chances, the bullish divergence between the stochastic RSI line and the positive crossover hints at an upside rally. This divergence indicates that while the price is making lower lows, momentum is shifting in favor of the bulls.
Furthermore, the general idea behind the falling wedge pattern is a bullish reversal. Hence, a positive cycle within the pattern is highly likely, provided Optimism maintains support above the key levels.
Upside Targets to Watch in Optimism
In case of a bullish turnaround, the Optimism price is likely to touch the overhead resistance trendline near the previous swing high of $1.47. A breakout above this level could trigger an extended bull run.
If the rally gains momentum, the price could reach the R1 resistance pivot level near the $2 psychological mark. This would represent a significant recovery, driven by renewed bullish sentiment.
Hence, with the short-term support at the $1.10 mark, OP price trend reveals an upside potential of nearly 75%. On the flip side, the crucial support remains at $0.77, after the $1 psychological mark.
Bearish Scenario: Analyst Predicts Further Correction in Optimism
Presenting a counter viewpoint, Ali Martinez, a crypto analyst, has highlighted a bearish head-and-shoulders pattern in the OP price chart. This pattern is considered a strong reversal signal, often leading to extended downtrends.
On the 5-minute timeframe, the neckline of the pattern coincides near the $1.05 mark. A breakdown below this level could trigger a deeper correction.
With the bearish pattern, the analyst anticipates a potential extended price correction in Optimism under the $1.00 psychological mark. In such a case, the downfall is likely to hit the $0.77 support level, which has historically acted as a strong demand zone.
Final Thoughts
Optimism stands at a critical juncture, with both bullish and bearish signals in play. While the falling wedge pattern and bullish divergence support a potential rebound, the bearish head-and-shoulders pattern warns of further downside.
Traders should closely monitor the $1.10 support and the $1.47 resistance to gauge the next significant move.
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