Optimism about to Rally?

OP, the layer2 blockchain Optimism token, is currently trading at a price of 0.912 USD. Like every other altcoin out there, OP has seen a significant drop in recent weeks. After setting a swing high on August 3rd. at 2.25 USD, it has been in a steep decline. So, where can we expect to see a bounce to the upside? Let's take a closer look.

If you want to take this trade with me, simply sign up for an account over at ByBit, where you can trade OP/USD.

Let's start with the daily chart on OP/USD. Here we can see we have a strong level of support on the daily chart at 0.794. This is clearly a critical level, as this is the final anchor point before the price on Optimism had a solid move to the upside. Because of this, we are likely to see this level act as a strong level of support.

Now, if we go to the 4-hour chart on tradingview and zoom in on the period July 22nd to July 27th and pull a fixed range for this period, we can see that this is the range we currently trade in. In other words, we are below the value area high of this range and have tested (and bounced from) the point of control of this range. We have not tested the value area low – yet. For now, note that the value area low is located at 0.811. I have extended the levels for this range to make it more visible.

Now, if we take that same snip and make the daily level visible (the daily level highlighted above), we can see this is placed just slightly below the value area low.

Now, if we go back to the daily chart and pull a Fibonacci retracement from the swim low at 0.40 to the swing high at 2.24, we can see that the 0.786 retracement level is located at a price of 0.79. This is basically right on top of the value area low of the range and the daily level of support. Click on the image below to see it in full size.

With these three levels placed on top of one another, this area is likely to act as a strong level of support. Because of this, I will be looking for a possible long trade in this zone. While this may not be the final swing point before a massive move to the upside, it should be a solid level to look for a bounce and, in my opinion, enough to give us a trade with a substantial risk to reward.

In the snip above, you can see exactly how I am looking to trade this. I will be looking for an entry around the 0.819 level with a stop loss at 0.772 and an initial profit target at the 1.09 level.

If you want to take this trade with me, simply sign up for an account over at ByBit, where you can trade OP/USD.