Disclaimer: The information presented does not constitute financial, investment, trading or any other advice and is solely the opinion of the author
- OP posted more than 20% gains in the last 24 hours at the time of writing
- More short positions were liquidated on the lower and higher time frames
Optimism [OP] is poised to reverse all early June losses if the press trail continues. The native token from the Layer 2 roll-up is up more than 20% in the past 24 hours, from $1.12 to $1.4.
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The revival followed Bitcoins [BTC] surprise entry into the $29,000 zone, despite the delay of the Coinbase and Binance lawsuits. If bullish sentiment continues and BTC holds up, OP could provide additional profit.
Can bulls move forward?
Source: OP/USDT on TradingView
In late May/early June, OP traded sideways within the $1.35 – $1.54 (orange) range. But it crossed the range and slid lower on June 10 after BTC retested $24,000. Then it entered another narrow consolidation range of $1.07 – $1.18 (white).
BTC’s rise to $29,000 tipped OP to trigger a bullish breakout from the narrow range formation. At the time of writing, the price action has retested and broke above the previous low of $1.35.
However, a price rejection was likely from the mid-range $1.44 as the bulls cooled off the rally. A pullback retest at the $1.35 range low could provide new buying opportunities targeting the mid-range ($1.44) and previous range high of $1.54.
A drop below the range low ($1.35) and subsequent close below $1.27 invalidates the bullish thesis. Such a drop could cause sellers to fight for control and likely devalue OP to $1.18.
Meanwhile, the Relative Strength Index (RSI) has reached overbought territory. In addition, On-Balance Volume (OBV) registered a sharp spike, indicating extreme buying pressure and demand, respectively.
Short positions are not recommended
Source: Coinglass
The liquidation stat indicated strong bullish sentiment and favored bulls in the futures market. In addition, more than $150,000 in short positions have been destroyed in the four-hour time frame.
How many Worth 1,10,100 VPs today?
Extrapolated to the daily time frame, over $2.4 million in short positions were liquidated, while longs suffered less than $300,000 during the same period. Therefore, the bullish sentiment could continue unless BTC pulls back.