Optimism (OP) saw a rebound in the market last week as it rose 35.76% based on data from CoinMarketCap. Ethereum’s layer 2 token is hovering above $2.20 with investors strongly optimistic about future price gains. However, some trading indicators suggest otherwise.
Optimism likely to decrease by 18%
in Posted on November 23 on Xfamous cryptocurrency analyst Ali Martinez shared a bearish outlook on optimism despite the token’s current upward trend.
According to Martinez, the TD Sequential indicator sent a sell signal on the 4-hour trading chart of OP, representing the possibility of an imminent price decline. In trading markets, the Tom Demark (TD) Sequential Indicator is commonly used to identify potential price exhaustion or continuation by analyzing patterns within price bars.
After the OP surge last week, the TD sequence now indicates trend exhaustion, indicating a possible price reversal. After the development of this signal, Martinez expects the OP price to fall to $2.0. However, further correction could force the token price to around $1.80, indicating a potential 18% decline from the current market price.
Martinez’s price forecast is also supported by OP’s Relative Strength Index, an indicator that measures the speed and magnitude of an asset’s price movement to determine whether it is overbought or oversold. According to OP’s 4-hour trading chart data, the token’s RSI of 65.18 and descending from the overbought zone indicates that buying pressure is weakening and a potential price correction is imminent.
However, optimism remains well above the 100-day simple moving average (SMA) suggesting the uptrend may continue. This factor, combined with the current strong bullish sentiment in the altcoin market, suggests that OP may maintain the current price rally, reaching $2.5, where the next significant market resistance lies.
Overview of the price of optimism
At press time, Optimism Exchanges reached $2.29 after a 1.64% gain over the past 24 hours. Meanwhile, the altcoin’s daily trading volume decreased by 13.17% and reached $860.51 million. On larger time frames, OP has made a remarkably impressive gain of 35.76% in seven days as mentioned earlier, and 33.77% in the past 30 days.
Despite the recent gains, the Ethereum Layer 2 token is still 54.65% away from its all-time high of $4.85. However, OP remains a favorite among investors given its position in the Ethereum ecosystem. According to data from Top 7 ICOOptimism is the second layer network of Ethereum with the third largest Total Value Locked (TVL) at $6.46 billion, trailing only Base ($7.02 billion) and Arbitrum ($14.3 billion).