As leading Ethereum layer-2 scaling solution Optimism (OP) enters 5th day of recovery rally, investors are asking is it too late to buy optimism – but significant resistance levels could mark end of upside moves – find out more in OP price analysis.
Optimism has rallied +5% since yesterday, as OP price action continues to grind to the upside in a hard-fought recovery rally fuelling bag-holders hopes.
This comes following a troubled summer for the layer-2 project, which has seen a -28.5% bleed-out since the start of May.
OP Price Analysis: Is it too late to buy Optimism?
As the recovery rally becomes emboldened, OP is currently trading at a market price of $1.55 (a 24-hour change of +1.77%).
The upside move marks the 5th day of technical rally structure, which has seen OP bounce +30% following a re-test of lower trendline support on August 17.
But trouble could be on the horizon, as the recovery rally has now entered a serious area of resistance stemming from the 20DMA.
A clean break above the 20DMA here could give OP legs, last time OP reclaimed this level in July the 20DMA provided nearly 30 days of support.
However, rejection from here could spell disaster – with no lower support levels below $1.50 to catch a fall back to lower trendline support.
Pushing off the 20DMA would prime OP price action to target the 200DMA (which stands high at $1.91).
OP hasn’t touched the 200DMA since a death-cross pattern emerged on May 18.
The recovery rally is proving to be a cause for concern on Optimism’s indicators, with the RSI heating-up rapidly to an overbought signal at 52.69.
This could demand a period of consolidation before OP breaks through the 20DMA.
And the MACD adds to this bearish outlook, still reflecting months of downside momentum with a bearish signal at -0.0004.
Overall, OP’s technical structure appears precarious, with the 20DMA resistance zone forming a key area to watch on the short-time frame.
To the upside, if the 20DMA flips to support, then OP is targeting a reclaim of position atop the 200DMA at $1.95 (a possible +25.73%).
However, downside risk remains a significant threat here, with rejection from the 20DMA likely to trigger a tumble back to lower trendline support at $1.2 (a potential -22.6% fall).
This leaves Optimism with an unattractive risk: reward ratio at 1.14 – with the short-time frame move wholly dependent on the 20DMA.
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